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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Committee on Climate Change
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Meeting Carbon Budgets - Progress
in reducing the UK’s emissions
2015 Report to Parliament
Committee on Climate Change
June 2015
Printed on 100% recycled paper.
Meeting Carbon Budgets Progress in reducing the UK’s emissions
2015 Report to Parliament
Committee on Climate Change
June 2015
Presented to Parliament
pursuant to section 36(1)
of the Climate Change Act 2008
Acknowledgements
The Committee would like to thank:
A number of organisations and stakeholders for their support, including DECC, Defra, DfT, the
Forestry Commission, Northern Ireland Executive, Scottish Government, Welsh Government, Energy
UK, Crown Estate, Climate Change Capital, ORED, OCCS, ETI, Energy Saving Trust, Green Deal Finance
Company, Salix Finance Ltd, Teesside Collective, Dr Matthew Hannon at Imperial College London, CIEMAP and Professor John Barrett at the University of Leeds.
The team that prepared the analysis for this report. This was led by Matthew Bell and Adrian Gault
and included: Owen Bellamy, Ute Collier, Taro Hallworth, Mike Hemsley, Gemma Holmes, Jenny Hill,
David Joffe, Alex Kazaglis, Ewa Kmietowicz, Eric Ling, Amy McQueen, Stephen Smith, Jack Snape, Kavita
Srinivasan, Indra Thillainathan, Mike Thompson and Ladislav Tvaruzek.
Other members of the Secretariat who contributed to this report: Jo Barrett, Nisha Pawar,
Yogini Patel, Hannah Witty, Sean Taylor and Stephanie Wildeshaus.
4
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Contents
The Committee
6
Overview 8
Chapter 1: Progress decarbonising the power sector
44
Chapter 2: Progress reducing emissions from buildings
72
Chapter 3: Progress reducing emissions from industry
100
Chapter 4: Progress reducing transport emissions
118
Chapter 5: Progress reducing emissions from agriculture
148
Chapter 6: Progress reducing emissions from waste and F-gases
168
Chapter 7: Devolved administrations
186
Abbreviations218
5
The Committee
The Rt. Hon John Gummer, Lord Deben, Chairman
The Rt. Hon John Gummer, Lord Deben established and chairs Sancroft, a
Corporate Responsibility consultancy working with blue-chip companies
around the world on environmental, social and ethical issues. He was the
longest serving Secretary of State for the Environment the UK has ever had.
His experience as an international negotiator has earned him worldwide
respect both in the business community and among environmentalists. He
has consistently championed an identity between environmental concerns
and business sense.
Professor Samuel Fankhauser
Professor Samuel Fankhauser is Co-Director of the Grantham Research
Institute on Climate Change and Deputy Director of the ESRC-funded Centre
for Climate Change Economics and Policy, both at the London School of
Economics, and a Director at Vivid Economics. He is a former Deputy Chief
Economist of the European Bank for Reconstruction and Development.
Sir Brian Hoskins
Professor Sir Brian Hoskins, CBE, FRS is the Chair of the Grantham Institute
for Climate Change at Imperial College and Professor of Meteorology at the
University of Reading. His research expertise is in weather and climate processes.
He is a member of the scientific academies of the UK, USA, and China.
Paul Johnson
Paul has been director of the Institute for Fiscal Studies since January 2011. He
is a visiting professor at UCL.
Paul has previously worked at the FSA and has been chief economist at the
Department for Education and director of public spending in HM Treasury as
well as deputy head of the UK Government Economic Service.
Paul is currently a member of the council and executive committee of the
Royal Economic Society, a member of the actuarial council of the FRC and has
just completed an independent review of consumer price inflation statistics
for the UK Statistics Authority. He has previously served on the council of the
Economic and Social Research Council. He was a founder council member of
the Pensions Policy Institute and in 2010 he led a review of the policy of autoenrolment into pensions for the new government.
6
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Professor Dame Julia King
Professor Dame Julia King DBE FREng is Vice-Chancellor of Aston University.
She led the ‘King Review’ for HM Treasury in 2007-8 on decarbonising road
transport. She was formerly Director of Advanced Engineering for the RollsRoyce industrial businesses, as well as holding senior posts in the marine
and aerospace businesses. Julia is one of the UK’s Business Ambassadors,
supporting UK companies and inward investment in low-carbon technologies.
She is an NED of the Green Investment Bank, and a member of the Airports
Commission.
Lord John Krebs
Professor Lord Krebs Kt FRS is currently Principal of Jesus College Oxford. Previously,
he held posts at the University of British Columbia, the University of Wales, and
Oxford, where he was lecturer in Zoology, 1976‑88, and Royal Society Research
Professor, 1988-2005. From 1994‑1999, he was Chief Executive of the Natural
Environment Research Council and, from 2000-2005, Chairman of the Food
Standards Agency. He is a member of the U.S. National Academy of Sciences.
He was chairman of the House of Lords Science and Technology Select Committee
from 2010 to 2014 and President of the British Science Association in 2012.
Lord Robert May
Professor Lord May of Oxford, OM AC FRS holds a Professorship at Oxford
University. He is a Fellow of Merton College, Oxford. He was until recently
President of The Royal Society, and before that Chief Scientific Adviser to the
UK Government and Head of its Office of Science and Technology.
Professor Jim Skea
Jim Skea has research interests in energy, climate change and technological
innovation. He has been RCUK Energy Strategy Fellow since April 2012 and
a Professor of Sustainable Energy at Imperial College since 2009. He was
Research Director of the UK Energy Research Centre 2004-12 and Director of
the Policy Studies Institute 1998-2004.
He has operated at the interface between research, policy-making and
business throughout his career. He is Vice-President and President-elect of
the Energy Institute. He is also a Vice-Chair of IPCC Working Group III. He
was awarded a CBE for services to sustainable energy in 2013 and an OBE for
services to sustainable transport in 2004.
The Committee
7
1
Overview
1. Overview of greenhouse gas
emissions
2. Underlying progress towards
reducing greenhouse gas
emissions
3. The contribution of infrastructure
to carbon budgets
8
4. Meeting the fourth carbon
budget and preparing for the
2050 target
5. Public sector expenditure on
meeting carbon budgets
6. Recommendations
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
11
Key messages and recommendations
This Progress Report fulfils our statutory duty under the Climate Change Act 2008. It sets out our
views on the progress made towards meeting the UK’s carbon budgets, and the further progress
needed to meet future budgets and the UK’s statutory 2050 target to reduce emissions by at least
80% from 1990 levels.
Two further reports are being published alongside this report:
• Our statutory report on whether adequate measures are being taken to adapt to inevitable
climate change caused by continuing emissions, Progress in preparing for climate change: 2015
Report to Parliament; and
• A high-level summary combining both this and the report on adapting to climate change,
Reducing emissions and preparing for climate change: 2015 Progress Report to Parliament.
The UK is on track to meet the second and third carbon budgets, and in 2014 emissions decreased
8% compared to the previous year. However, concerns remain about underlying progress, and
about whether progress can be sustained through the 2020s. Significant action is required in the
new Parliament in order to meet the fourth carbon budget and to stay on track to the 2050 target.
The key risk to future progress is the current uncertainty over the long-term policy framework.
Many existing policies or associated funding for the transition to a low-carbon economy are due
to end by 2020. There is a need for these to be extended as soon as possible to give confidence to
investors and to support low-carbon innovation and consumer choices.
Some areas are underperforming, like low-carbon heat. Actions are needed in these areas to
ensure policies fully address the barriers to change in order to increase uptake. Actions are also
needed to maintain existing strong progress in areas such as deployment of low-carbon electricity
generation capacity and take-up of efficient new vehicles. Effective policy should aim to reduce
emissions now and to develop options for reducing emissions in future. We set out detailed policy
recommendations in Tables 6 and 7 at the end of this summary.
Our key messages on progress towards carbon budgets are:
• Provisional statistics indicate that domestic greenhouse gas emissions decreased 8% in
2014, compared to the previous year, to 520 MtCO2e. Some of the decrease is due to higher
average winter temperatures, without which the overall reduction in emissions would have
been around 6%. This is far higher than reductions since the financial crisis, which averaged
around 1% annually from 2009 to 2013, and goes beyond the 3% annual reductions required
by carbon budgets. However, it should be interpreted with some caution. It largely reflects a
reduction in coal use in the power sector. While this is welcome, emissions reductions will be
needed across the economy to meet carbon budgets and the 2050 target.
• Underlying progress has been mixed. Some sectors have successfully implemented changes
that will lock in emissions reductions, but there remain areas with little evidence of progress.
– There has been good progress in expansion of renewable electricity generation, installation
of efficient boilers and loft insulation, deployment of low-carbon heat in industry, and new
car and van CO2.
1
All 2014 figures are based on preliminary data from DECC Provisional UK greenhouse gas emissions national statistics 2014. They are subject to revision.
Overview 9
Key messages and recommendations
– There has been limited progress in other areas, for example deployment of low-carbon heat
in buildings, take-up of the most efficient domestic appliances, and schemes to reduce
travel demand.
• The devolved administrations account for 22% of the UK’s emissions and will play an
increasingly important role. They already lead the UK in reducing emissions in a number of
areas but there remain areas where stronger action is required.
– Emissions are likely to have fallen in 2014 across Scotland, Wales and Northern Ireland, in line
with the UK, reflecting a further reduction in the carbon intensity of electricity generation
through increased renewables.
– In some policy areas the devolved administrations lead the UK, with stronger targets and
additional allocated funding, in particular in residential energy efficiency and waste.
– The devolved administrations are also making good progress in renewable electricity,
accounting for 40% of the UK’s total renewable capacity in 2014. However, progress in
renewable heat deployment is slow and targets are not being met.
– Stronger action will be required in key areas in order to meet future targets. This includes
energy efficiency programmes, encouraging greater uptake of electric vehicles and travel
behaviour change, increasing tree-planting rates and ensuring waste targets are met.
We monitor progress against our indicator framework. This is composed of a set of trajectories for
actions that, taken together, would put the UK on track to future carbon budgets and the statutory
2050 target. It reflects our best assessment of the cost-effective path which minimises the
economic cost of meeting the 2050 target. To the extent that some areas underperform against
our indicator framework, others will need to overperform to meet carbon budgets.
To succeed in this transition to a low-carbon economy, Government needs to lead on three
key issues: investment to support growth in low-carbon sectors, developing future options and
enabling low-carbon choices:
• Low-carbon investment: Many low-carbon policies and funding streams have no certainty
beyond the next few years. That prevents efficient investment in low-carbon technologies and
their supply chains, which often have long lead-times and payback periods and in many cases are
not yet economic without Government intervention. To enable those investments, Government
will need to extend existing policy approaches and funding commitments into the 2020s. Specific
examples covered in this report include funding for low-carbon electricity, the approach to lowcarbon heat and energy efficiency in buildings and emissions regulations for vehicles.
• Developing future options and innovation: Many of the technologies that could contribute to
meeting the 2050 target are still developing in terms of their cost and performance, the ability
of suppliers and financiers to deliver them and the willingness of consumers to adopt them.
Public support should be targeted to areas that the market will not or cannot provide, including
some elements of R&D and infrastructure spending. To support private innovation, Government
must ensure that there is a clear future market for low-carbon products through credible policy
commitments that “price in” a rising cost of carbon. There is scope for substantial benefits for UK
industry which is well placed to compete in many areas of green innovation. Specific examples
include offshore wind, carbon capture and storage (CCS), low-carbon heat, electric vehicles, and
many earlier-stage technologies needing research, development and demonstration.
10
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Key messages and recommendations
• Low-carbon choices: How lifestyles – which have changed considerably over the past 35
years – continue to change and the decisions people make in response to new products will
increasingly determine whether we continue to reduce emissions. Government has a role to
address barriers to change, through effective policy design and evaluation to build the evidence
base for “what works”. Specific examples include setting incentives and information provision to
increase take-up for new products such as electric and low-emission vehicles, home insulation
measures and heat pumps, and behavioural choices such as travel behaviour and food
consumption.
This assessment leads to four main recommendations for this Parliament:
1. Electricity: Ensure the power sector can invest with a 10-year lead time. As soon as possible,
set the Government’s carbon objective for the power sector in the 2020s and extend funding
under the Levy Control Framework to match project timelines (e.g. to 2025 with rolling annual
updates).
2. Buildings: Develop plans and policies that deliver low-carbon heat and energy efficiency.
a. D
evelop an action plan to address the significant shortfall in low-carbon heat, ensuring a better
integration with energy efficiency and fuel poverty. Commit to the Renewable Heat Incentive to
2020, or until a suitable replacement is found.
b. Set out the future of the Energy Company Obligation (ECO) beyond 2017, ensuring it delivers
energy efficiency while also meeting fuel poverty targets.
c. Implement the zero carbon homes standard without further weakening, ensuring investment in
low-carbon heat.
3. Transport: Maintain support for the up-front costs of electric vehicles, while they remain
more expensive than conventional alternatives and push for stretching 2030 EU CO2 targets for new
cars and vans.
4. Infrastructure: Make decisions that help reduce emissions. A range of infrastructure decisions
to be made this Parliament could have significant impacts. Foremost amongst these is the need
for carbon capture and storage (CCS). Others include requirements for infrastructure support for
heat networks and electric vehicles. Decisions taken now need to avoid ‘lock-in’ to high carbon
pathways.
We make some additional, detailed recommendations across these themes. They are summarised
in Tables 6 and 7.
Overview 11
In this overview we review progress across the whole of the economy, including policies that affect
multiple sectors:
• Section 1: Overview of greenhouse gas emissions documents the changes in UK domestic
greenhouse gas (GHG) emissions between 2013 and 2014, and sets these changes in the context of
the second carbon budget and future targets.
• Section 2: Underlying progress towards reducing greenhouse gas emissions summarises
underlying progress made towards meeting carbon budgets, based on the assessments set out in
Chapters 1-7. This assessment is against our indicator framework which monitors specific actions at
sector level that, taken together, would keep the UK on track to meet its carbon budgets.
• Section 3: The contribution of infrastructure to carbon budgets assesses the extent to which
plans for development of infrastructure across the UK are consistent with meeting carbon budgets
and the cost-effective path to the 2050 target. We also consider the emissions impact of the
Government’s National Infrastructure Plan.
• Section 4: Meeting the fourth carbon budget and preparing for the 2050 target summarises
our evaluation of current policies (set out in Chapters 1-7), identifying those that are expected to
achieve their intended reduction in emissions and those that are at risk. This shows that there are
significant risks to delivery and a “policy gap” between emissions projections under current policies
and the cost-effective path that would meet the fourth carbon budget and put the UK on track
to the 2050 target. This section also discusses other uncertainties affecting the emissions path,
including the impact of the recent fall in fossil fuel prices.
• Section 5: Public sector expenditure on meeting carbon budgets sets out current public sector
expenditure towards meeting carbon budgets, in the context of total government expenditure and
UK GDP.
• Section 6: Recommendations summarises our recommendations, including those discussed in
Chapters 1-7.
The remainder of the report then addresses progress and priorities across the sectors of the economy
and in the devolved administrations.
• Chapter 1 - Progress decarbonising the power sector
• Chapter 2 - Progress reducing emissions from buildings
• Chapter 3 - Progress reducing emissions from industry
• Chapter 4 - Progress reducing transport emissions
• Chapter 5 - Progress reducing emissions from agriculture
• Chapter 6 - Progress reducing emissions from waste and F-gases
• Chapter 7 - Devolved administrations
12
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
1.
Overview of greenhouse gas emissions
As required under the Climate Change Act, we report on UK domestic emissions of six greenhouse
gases: carbon dioxide, methane, nitrous oxide and three fluorinated-gases. Although not currently
included in the carbon budgets, international aviation and shipping emissions are an important part of
the 2050 target, and we consider them in Chapter 4 - Transport.
Provisional emissions statistics indicate that UK domestic greenhouse gas emissions were 520 MtCO2e
in 2014. Emissions from the power sector made up the greatest share (23%), followed by emissions
from transport (22%), industry (19%) and buildings (16%). Sector specific estimates for agriculture and
waste emissions are not yet available, but total emissions from agriculture, waste and other non-CO2
are estimated to account for 19% of total emissions (Figure 1).
The 2014 statistics suggest an 8% decrease in emissions compared to the previous year, resulting in
emissions that are 36% below 1990 levels. This means that emissions are below the average annual
level of the second carbon budget and close to the level of the third budget, but with deep reductions
still required to meet the fourth carbon budget (Figure 2).
Figure 1. Total UK domestic GHG emissions by sector in 2014 (MtCO2e)
Agriculture, waste,
other non CO2
97
Power
121
Total UK GHG emissions
520 MtCO2e
Buildings
84
Transport
117
Industry
100
Source: Provisional emissions statistics for CO2 are based on energy use data, as published in Energy Trends, where available. Where data on energy use is not available,
emissions for CO2 are assumed to remain unchanged from the previous year, while for other GHGs, provisional emissions estimates are based on the assumption that
the trend in emissions will be halfway between “no change” on the latest year and a repeat of the trend over recent years. The total emissions exclude the emissions from
international aviation and shipping. Emissions from electricity generation are allocated to the power sector rather than to the sectors where the electricity is used.
The reduction in emissions in 2014 is far higher than other reductions achieved since the financial crisis.
Emissions fell at an annual average rate of about 1% over the period 2009-2013 (Figure 2). The larger fall
in 2014 reflects, in part, a milder winter that depressed demand for heating. However, even without the
higher average winter temperatures, the reduction in emissions (i.e. the temperature adjusted change)
would have been around 6%2. If that could be sustained in future years, it would achieve the 2050
target in the Climate Change Act 15 years early. This raises the question of whether the drop reflects
significant progress in reducing underlying sources of emissions, or whether it reflects one-off events.
The large drop in emissions in 2014 was driven by an 18% reduction in emissions from the power
sector, alongside reduced emissions from industry (Figure 3).
2
Our approach to adjusting for temperature is set out in Technical Annex 1 - Overview
Overview 13
Figure 2. UK GHG emissions against legislated budgets and 2050 target (MtCO2e)
800
2050 target (inc. IAS)
700
GHG emissions
600
Legislated carbon
budgets
500
400
300
200
100
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
0
Source: DECC Provisional UK greenhouse gas emissions national statistics 2014, CCC calculations
Note: GHG emissions are presented on a total (gross) basis, while carbon budgets relate to the net carbon account. IAS = international aviation and shipping.
Figure 3. Change in UK domestic GHG emissions between 2013 and 2014
5%
1%
temp. unadjusted
1%
temp. adjusted
% change on 2013
0%
-2%
-2%
-5%
-2%
-6%
-6%
-8%
-10%
-15%
-16%
-20%
-15%
-18%
Power
Buildings
Industry
Transport
Agriculture,
waste, other
non-CO2
Total GHG
Source: DECC (2014): 2014 UK Greenhouse Gas Emissions, Provisional Figures
Note: Provisional emissions statistics for CO2 are based on energy use data, as published in Energy Trends, where available. Where data on energy use is not available,
emissions for CO2 are assumed to remain unchanged from the previous year, while for non-CO2 GHGs, provisional emissions estimates are based on the assumption that
the trend in emissions will be halfway between “no change” on the latest year and a repeat of the trend over recent years.
The large reduction in emissions from the power sector reflects a combination of underlying progress
that can be expected to continue and changes that are not replicable in the long term:
• Electricity demand fell 4%. This was partly, though not wholly, as a result of the mild winter and as
consumers installed embedded generation (i.e. rooftop solar). There was also a 2.2 percentage point
increase in the share of electricity imports; the emissions of imports are not counted in the UK’s
carbon account though they are covered by the EU Emissions Trading System.
• The share of generation met by low-carbon sources increased by 4 percentage points to 35% as
more renewable capacity was installed.
14
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• The impact of these changes on emissions was exaggerated as it was all reflected in reduced
generation from coal, the most carbon-intensive fuel source, which decreased by 23%. Half of this
is permanent as some plant (1.2 GW) closed due to EU air quality directives, and some (0.65 GW)
converted to biomass generation. The other half reflected reduced use of the 20 GW of coal plants
that remain on the system.
• By 2050 almost all generation will need to be provided from low-carbon sources. In that
context, the 4% increase in the low-carbon share, which itself represents good progress, is more
representative of progress towards the long-term target than the headline emissions figure.
The other significant emissions reduction in 2014 was in the industrial sector (down 6%). However,
there is limited information available on what has driven this change. The provisional statistics for
industry have been subject to substantial revisions in previous years.
Emissions in the other sectors, which together account for 56% of UK emissions, did not demonstrate
significant reductions:
• Without the higher average winter temperatures, we estimate that buildings emissions would have
fallen only slightly.
• CO2 emissions from transport rose slightly.
• Emissions estimates for agriculture, waste and other non-CO2 gases are based on past trends and
highly uncertain.
We conclude that whilst the large drop in emissions in 2014 is welcome, it cannot be taken as a sign
that the UK has shifted permanently to a lower emissions path. The headline figures are dominated
by the power sector and uncertain reductions in industry, whereas progress will be needed across all
sectors to meet carbon budgets and the 2050 target.
Meeting carbon budgets and preparing for the 2050 target
The UK is on track to meet the second and third carbon budgets (2013-2017 and 2018-2022). However,
this partly reflects accounting changes and does not imply that the UK is progressing as required to
the fourth carbon budget (2023-2027) or the 2050 target, which require genuine progress in reducing
emissions (Box 1):
• Under the Climate Change Act, performance against carbon budgets is measured by the net UK
carbon account. For those sectors of the economy (i.e. the power sector and energy-intensive
industry) covered by the EU Emissions Trading System (EU ETS), this is based on the UK’s share of the
ETS cap rather than actual emissions. We estimate that the net carbon account was 497 MtCO2e in
2014. This is 11% below the level required to meet the second carbon budget, which imposes an
annual average limit of 556 MtCO2e for the years 2013-2017. It is also 2% below the level required to
meet the third carbon budget, which imposes an annual average limit of 509 MtCO2e for the years
2018-2022.
• However, this low level of the UK’s net carbon account reflects changes in the UK’s share of the ETS
cap for 2013-2020, rather than progress reducing emissions in the rest of the economy. Meeting the
second and third carbon budgets is therefore no longer a reliable indicator of whether the UK is
suitably on track to the fourth carbon budget or the 2050 target, since these require that actual UK
emissions are significantly reduced in sectors not covered by the EU ETS.
Overview 15
Earlier this year, the Committee provided advice to the Secretary of State for Energy and Climate
Change on this issue.3 We concluded that it should be addressed in order to maintain the integrity of
the carbon budgets:
• Ideally, the second and third carbon budgets would be tightened to reflect the change to the UK
share of the EU ETS cap;
• If this is not possible, the Government should commit not to carry forward to future carbon budget
periods any surplus emission allowances arising from the difference between the expected and
outturn UK’s share of the ETS cap.
This approach would make it clear that emissions in the non-traded sector need to reduce at the
rate of 3% per year, consistent with meeting the 2050 target in the most cost-effective manner, and
meeting the fourth carbon budget.
While the net carbon account determines whether a budget is met, it is important also to focus on
actual (gross) emissions in the traded sector, given the need to reduce these in the context of meeting
longer-term carbon targets.
In section 2 we set out UK progress as compared to our best estimate of the cost-effective path in
both the traded and non-traded sectors. In section 4, we assess whether current policies put the UK
on track to meet the fourth carbon budget and prepare for the 2050 target. Both those assessments
show some good progress, but with more to be done – we set out our recommendations in section 6.
3
16
Available at: http//www.theccc.org.uk/publication/letter-preserving-the-integrity-of-the-uks-climate-change-regime/
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Box 1. The Net Carbon Account and Second and Third Carbon Budgets
The net carbon account can be calculated as:
• The UK share of the European Union Emissions Trading System (EU ETS) cap; plus
• Actual emissions from sources not covered by the EU ETS (the “non-traded sector”).
The net carbon account is different from the actual level of UK emissions because for those sources covered by the EU
ETS (the “traded sector”) actual emissions will generally differ from the UK’s share of the EU ETS cap.
The UK’s share of the EU ETS cap is the total number of emissions allowances allocated directly to UK installations,
including to any new market entrants, and allocated to the UK Government to auction.
We estimate that the net carbon account was 497 MtCO2e in 2014:
• Non-traded sector emissions were 322 MtCO2e.
• We estimate that the UK share of the EU ETS cap was 175 MtCO2e, which was lower than the actual emissions from
UK sources covered by the EU ETS (198 MtCO2e).
• The net carbon account (497 MtCO2e) is therefore lower than the UK’s actual emissions (520 MtCO2e) in 2014.
When we recommended the level of the first three carbon budgets we expected that the UK share of the EU ETS cap
would be an annual average of 223 MtCO2e over the second carbon budget period (2013-2017). Our current estimate
is substantially lower. There have been changes to the total number of allowances at the EU level, as well as the share
of those allowances across member states, the net effect of which has reduced the UK share of the ETS cap. The
introduction of backloading in the EU ETS (temporary removal of allowances from the ETS, to be introduced later) is
also likely to further reduce the UK share of the cap.
The impact of these changes is that the second and third carbon budgets, legislated in 2009, can now be met with
a higher level of emissions from the non-traded sector. In fact, the second and third budgets no longer require a
reduction in actual UK emissions (Table B1). This is in contrast to the lowest cost way of progressing towards the 2050
target, which requires steady ongoing reductions year-on-year.
Therefore, while the UK is on track to meet the second and third carbon budgets, the changes to the EU ETS mean that
this is no longer a reliable indicator of whether the UK is on track to meet the fourth carbon budget or the 2050 target
cost effectively.
Table B1. Required effort in the non-traded sector under the second carbon budget
Original expectation (MtCO2e)
Second carbon budget
2014 estimate (MtCO2e)
2,782
Annual average allowance
556
UK share of ETS cap (estimated)
223
175
Non-traded sector allowance
333
381
1.4% reduction
1.3% increase
Required annual average change
versus first carbon budget in the nontraded sector
Source: DECC provisional statistics (2015), EEA ETS data viewer, CCC calculations.
The operation of the EU ETS
The purpose of the EU ETS is to set a sufficiently ambitious overall cap so that European traded sector
emissions decrease in line with the EU’s 2050 target while allowing for differences in the relative costeffectiveness of reducing emissions across member states.
Overview 17
However, since the financial crisis, emissions across Europe in sectors covered by the EU ETS have
been consistently below the level of the cap, suggesting that the cap has been met without any effort
required to reduce GHG emissions (Figure 4). The market value of European Union Allowances (EUAs) is
therefore very low, and does not currently provide a significant incentive to reduce GHG emissions:
• The EU ETS, currently in Phase 3 (2013-2020), sets total EU allowances at 2,084 MtCO2e in 2013,
followed by 1.74% annual reductions until 2020.
• In 2014, verified EU traded sector emissions decreased by 5% to 1,812 MtCO2e, 11% below the level
of the ETS cap.
• Cumulatively, there has been an excess of allowances of around 2 GtCO2e, roughly equivalent to the
entire 2014 cap.
• The persistent excess of EUAs has kept their price very low, at an average of €6.2 per tonne in 2014.
Figure 4. Total EU traded sector emissions relative to cap (MtCO2e)
3000
Verified emissions
EU cap
2500
2000
1500
1000
500
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
0
Source: European Commission, EEA ETS data viewer
Note: For years 2005-2012, the red line represents total allocated allowances over the first and second trading period (freely allocated allowances, correction of freely
allocated allowances and allowances auctioned or sold) corrected for scope adjustments. In 2013, the value is set to 2,084 MtCO2e and then reduced each year by 1.74%
until 2020, followed by 2.2% annual reduction to 2030. The verified emissions are also corrected for scope adjustment to provide comparable time series.
In order to restore the value of the EU ETS as a policy instrument (and the credibility of EU climate
policy more broadly), the cap to 2030 must constrain GHG emissions sufficiently to ensure adequate
progress to 2050.
In October 2014 the European Council agreed a 2030 policy framework for climate and energy. Its key
provisions were:
• A target of at least a 40% reduction in total EU emissions below 1990 levels, met through domestic
measures alone (i.e. without the purchase of international carbon credits from outside the EU).
• An increase in the annual reduction in the EU ETS cap from 2020 to 2.2%, from the currently
legislated 1.74%. This would mean that the EU ETS cap in 2030 would be 43% below the 2005 level.
These proposals were supplemented by plans for structural reform of the EU ETS, largely involving
a ‘Market Stability Reserve’ to address the surplus of emission allowances that has built up and to
improve the resilience of the system to major shocks. Negotiations around the Market Stability Reserve
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
are continuing and will require approval by the European Parliament and Council. This is currently
expected by summer 2015. The UK Government has supported commencement of the Market Stability
Reserve as soon as possible (i.e. 2017). It should continue to do so.4
There is also the possibility that the EU will increase its proposed effort for 2030 after the UN
negotiations in Paris at the end of this year. A successful agreement in Paris would include a process
for parties to increase ambition and require transparent reporting of efforts. The UK Government has
supported a higher EU ambition: a 50% reduction in total emissions by 2030 relative to 1990. We will
return to this issue as part of our advice on the fifth carbon budget.
Whilst the EU carbon price may remain low for some time, it could have to increase rapidly in future
if the EU commits to significant action to reduce emissions as part of a wider international effort. It is
important therefore that the the UK develops policies and makes investments that prepare for a higher
carbon price, rather than assuming that the current low price will persist in the long term.
The UK carbon price support
UK power plants pay a higher price for their carbon emissions than the price in the EU ETS. This is due
to the UK’s carbon price support, which was introduced in 2013 at a price of £4.94/tonne (on top of the
£4/tonne in the EU ETS), and with a target trajectory to top up the EU ETS price to reach a total “Carbon
Price Floor” of £33/tonne in 2020 and £78/tonne by 2030 (2014 prices). The carbon price support was
increased to £9.55/tonne in 2014 and £18.08/tonne in 2015.
The rising cost of carbon in the UK power sector has contributed to the large reduction in coal
generation and the closing of several coal plants in 2014.
However, as we reported last year, the carbon price support will be frozen at £18 until 2019. The
combined price is therefore likely to be well below the original Carbon Price Floor until the EU ETS
is significantly strengthened. The new Government should recognise this when setting other policy
approaches to support low-carbon investment in the power sector.
• The Government has committed to the removal of new public subsidy for onshore wind. In judging
the level of subsidy paid to low-carbon generators (e.g. onshore wind), the Government should
consider the full costs of the low-carbon option and the alternative:
– This should include any system integration costs, for example reflecting that intermittent
renewable capacity will generally need to be backed up by flexible capacity that can operate
on demand. We will explore these costs further as part of the analysis for our advice on the fifth
carbon budget.
– The appropriate comparator is not the wholesale electricity price, but the alternative means of
providing generation. Where this is unabated gas generation, its costs should be judged across
its lifetime, assuming that it would face the full costs of its emissions.
– We also note that a long-term contract for low-carbon generators is not itself a subsidy.
– This implies for example, that under the Government’s central scenarios for carbon and gas
prices, onshore wind at a cost of £80/MWh should be considered subsidy free from around 2020.
4
Since any tightening of the EU ETS makes UK carbon budgets easier to meet (see Box 1) but does not reduce effort required on the path to the 2050 target, it follows that any
tightening of the EU ETS should be accompanied by a tightening of existing carbon budgets.
Overview 19
• We have recommended extension of the funding commitment for low-carbon power generation.
This is the cost of funding low-carbon investments over and above the market price of carbon.
If the Government sets this funding based on an assumed future carbon price which does not
transpire in the market, the presumption should be that the funding will be increased, rather than
the ambition reduced.
We set out these policy recommendations in more detail in Chapter 1 - Power.
2.Underlying progress towards reducing greenhouse
gas emissions
Our approach to monitoring progress
The carbon budgets were set to reflect our best estimate of the most cost effective path to the
statutory 2050 target. Monitoring progress against the actions required on that cost-effective path
provides an indication of whether the UK is likely to meet the carbon budgets and the 2050 target at
lowest cost.
We use indicators to monitor progress towards meeting the legislated carbon budgets:
• Headline indicators that directly measure reductions in GHG emissions: economy- and sector-wide
GHG emissions, GHG emissions intensity and energy demand.
• Implementation indicators that measure actions designed to reduce GHG emissions, for example:
additional low-carbon power generation capacity, roll-out of loft, cavity wall and solid wall
insulation, take up of electric vehicles, tree planting.
• Policy milestones which track measures needed to enable future action to reduce GHG emissions:
commitments to funding such as the Levy Control Framework and support for electric vehicles, as
well as non-funding commitments such as building standards and publication of relevant strategies
and action plans.
There is inevitable uncertainty over the rates at which technologies will become available and their
future costs, the type and speed of behaviour change and a large number of other factors. Our
indicators represent our best assessment of the technologies and behaviours required to meet
emissions targets at lowest cost, based on the latest evidence. We will continue to reassess the costeffective path and the associated indicators.
The indicators are not intended to be prescriptive or exhaustive:
• It may be possible to meet carbon budgets while underperforming in some indicators provided
that is offset by outperformance of other indicators.
• It is possible that some technologies or behaviours that are not currently included in our indicator
framework become more cost-effective than current evidence suggests.
The requirement on Government, in response to this report, is to be clear about how it will meet the
carbon budgets and the 2050 target. Where it decides alternative routes are better it must set out how
they are consistent with the cost-effective path to the 2050 target.
Performance adopting low-carbon technologies and behaviours
Table 1 summarises the underlying progress against our indicator framework, with further detail set
out in each sector chapter. Overall we find evidence that good progress has been made in some areas,
but not in others:
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• Power (23% of UK emissions): Near-term progress in installing new low-carbon capacity is on
track, but longer-term development of projects is at risk. Low-carbon capacity should provide
the bulk of generation by 2030 such that the sector’s carbon intensity is reduced by 80-90% to
50‑100 gCO2/kWh.
– Average carbon intensity fell 12% in 2014 to 443 gCO2/kWh, and if gas plants had always been
used ahead of coal plants (which was technically possible throughout the year) then carbon
intensity would have been 263 gCO2/kWh. That represents an improvement in achievable
emissions intensity of 11% on 2013, 43% on 2007.
– Investment in renewable capacity is in line with our indicators, taking renewable generation to
20% of total UK generation, up from 5% in 2007.
– Progress is set to continue to 2020. Deployment of renewables continues to make good progress,
particularly for onshore wind, offshore wind and solar power. There is sufficient volume in project
pipelines to maintain this momentum - projects already under construction or contracted under
Electricity Market Reform are sufficient to increase the renewables share to over 30% in 2020.
– The pipeline beyond 2020 is less developed and is at risk given the high degree of uncertainty
about the contracts that will be available to investors beyond 2020. These risks are increased by
delays in previous years to carbon capture and storage and further delays this year for the new
nuclear programme.
• Buildings (16% of UK emissions): Progress is currently falling short against our indicators for
improving the efficiency of UK buildings and appliances and for the take-up of low-carbon heat
towards 12% of UK demand by 2020.
– Recent policy changes have resulted in a slow-down in the rate of installation of insulation
measures in homes. This follows a period of good progress since 2008 when emissions from
homes have decreased due to more efficient boilers and higher levels of insulation, as well as
more efficient appliances and lighting. The slow-down is also having a detrimental impact on
the UK’s ability to meet targets to alleviate fuel poverty.
– Non-residential buildings emissions have stayed flat, with limited information available on actual
installations of insulation or other improvements in thermal efficiency.
– In 2013, low-carbon heat accounted for only 1.6% of buildings’ heat demand. Current heat
policies are expected to result in deployment that falls well short of our indicator trajectory,
which would cause a large emissions gap in the fourth carbon budget period (see section 4).
• Transport (22% of UK emissions): Progress is broadly on track to our indicators for improving the
efficiency of new vehicles towards 50 g/km for cars and 60 g/km for vans by 2030 whilst increasing
the penetration of ultra-low emission vehicles (e.g. electric cars) towards 60% of sales by 2030.
– New car and van CO2 intensity has continued to improve and is broadly in line with our
indicators. For cars, CO2 intensity in 2014 is 125 g/km. This is 2.8% below the previous year and
24% lower than 2007.
– There has been strong growth in UK electric vehicle (EV) sales which more than quadrupled in
2014 to 0.3% of new car and van sales, significantly outperforming our indicator. Qualitative signs
are also encouraging, with a wide range of models now available across car classes and some
improvements in national charging infrastructure.
Overview 21
• Industry (19% of emissions) and agriculture (9.5% of 2013 emissions): Underlying progress is
harder to track in industry and agriculture where there is limited data available on low-carbon
investments and practices.
• Waste sector (4% of emissions in 2013): Waste is broadly meeting our indicators, with the amount
of biodegradable municipal waste sent to landfill down by 45% in 2014 relative to 2007.
This picture demonstrates that planned emissions reductions are possible and can be delivered
through a variety of means. There has been success with EU regulation (new vehicles), UK regulation
(boilers), taxation (waste) and public subsidy (renewable power). Extending this success will require that
the right mix of instruments is used to overcome specific barriers to action, as we set out in section 6.
Table 1. Underlying progress in 2014
Measure
Indicator
Outturn (UK)
Outturn (Devolved
Administrations)
Power
Total renewable generation
58TWh
62TWh
Scotland: 19.0 TWh
Wales: 3.4 TWh
Northern Ireland:
1.7TWh
2014 numbers are
provisional
Renewable capacity: onshore wind
8.1GW
8.5GW
Scotland: 5.0GW
Wales: 0.6GW
Northern Ireland: 0.7GW
Renewable capacity: offshore wind
4.7GW
4.5GW
Scotland: 0.2GW
Wales: 0.6GW
Northern Ireland: 0GW
Buildings
A-rated boilers
6.8m
9.3m
Loft insulation
4.15m (cumulative)
5.9m (cumulative)
Scotland: 1.1m
(cumulative) (2013)
Cavity wall insulation
3.5m (cumulative)
3.2m (cumulative)
Scotland: 1.2m
(cumulative) (2013)
Solid wall insulation
0.7m (cumulative)
0.2m (cumulative)
Scotland: 71,000
(cumulative) (2013)
Low-carbon heat
2.2% of total heat
demand
1.6% of total heat
demand
A++ rated cold appliances
6% of stock
1%
A+ rated wet appliances
21% of stock
14%
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Table 1. Underlying progress in 2014
Measure
Indicator
Outturn (UK)
Outturn (Devolved
Administrations)
Industry
Low-carbon heat
1.3% additional since
2007 (2.7% total)
3.3% additional since
2007 (4.7% total)
122.8g/km
124.7g/km
Transport
New car CO2
Scotland: 124.4g/km
Wales: 123.5g/km
Northern Ireland:
122.7g/km
New van CO2
180.2g/km
181.9g/km
Scotland: 183.4g/km
Wales: 186.2g/km
Northern Ireland:
180.7g/km
Electric vehicles (total)
11,257
15,277
Biodegradable waste sent to landfill
-34% to -48%
-45%
Percentage of methane captured at
landfill sites
59%
61%
Waste & other non-CO2
Source: Multiple sources: see Technical Annexes 1-8.
3.
The contribution of infrastructure to carbon budgets
Infrastructure plays a key role in supporting economic activity in a modern well-connected society. It
also has an important role in meeting the legislated carbon budgets and the 2050 target. Investment
in infrastructure provides an opportunity to support economic growth and a low-carbon economy as
the UK emerges from the financial crisis.
In this section we describe the infrastructure required to meet carbon budgets and compare
this to current plans for infrastructure development at the national level and across the devolved
administrations. We also consider the increase in emissions arising from these plans, concluding that
any increase is likely to be small and manageable.
Infrastructure needed to meet carbon budgets
New infrastructure has a key role to play in decarbonising the power sector, transport and buildings.
This includes:
• Low-carbon electricity generation capacity sufficient to meet UK demand of a very low carbonintensity of generation (e.g. reducing carbon intensity from the current level around 450 gCO2/kWh
to 50-100 gCO2/kWh in 2030).
• Electricity transmission and distribution infrastructure to accommodate increased renewables
capacity and additional demand from heat pumps and electric vehicles.
• Smart grid infrastructure capable of supporting an increase in demand-side response and
maximising the efficiency of the transmission and distribution networks.
Overview 23
• CO2 pipes and storage infrastructure to support a significant roll-out of carbon capture and
storage (CCS) in both electricity generation and industry.
• Electric vehicle charging infrastructure sufficient to facilitate full roll-out of electric vehicles,
including a nationwide network of charge points in public places, and across the strategic road
network.
• District heating infrastructure that can support low-carbon heat delivered to industry, commerce
and homes.
A wider definition of infrastructure would also include measures to decarbonise buildings (i.e.
insulation, low-carbon heat, etc). These measures are discussed in Chapter 2 – Buildings. Improved
flood defences, resilience of existing infrastructure and infrastructure investment to address regional
water scarcity and other impacts of ongoing climate change are also needed, and discussed in our
accompanying report on adapting to a changing climate.
It is clear that there are opportunities for targeted infrastructure spending to play a significant role
– including in CO2 transport and storage for CCS (Chapter 1 – Power), low-carbon heat networks
(Chapter 2 – Buildings) and charging for electric vehicles (Chapter 4 – Transport).
The National Infrastructure Plan
The National Infrastructure Plan sets out the Government’s vision and approach for how the
infrastructure needs of the economy are expected to be met across transport, energy, flood defences,
water, waste, communications and science. First published in 2010, the National Infrastructure Plan was
most recently updated in December 2014.
The National Infrastructure Plan is underpinned by the National Infrastructure Pipeline, which sets out
details of £460 billion of planned infrastructure investment to 2020 and beyond (Table 2).
Table 2. National Infrastructure Pipeline
Sector
No. of projects & programmes
Total spend to 2020
and beyond (£m)
6
£10,954
Energy
147
£274,931
Flood
26
£3,654
Science and Research
22
£1,375
Transport
270
£142,273
Waste
20
£1,984
Water
60
£30,861
Grand Total
551
£466,031
Communications
Source: HM Treasury (2014): National Infrastructure Pipeline December 2014
The National Infrastructure Plan includes spending on a number of areas relevant to carbon budgets
and adaptation to climate change:
• Electricity generation. The National Infrastructure Pipeline provides for £78 billion of expenditure
between 2021 and 2030 on an illustrative investment profile, consistent with overall deployment
under the EMR Delivery Plan 100 gCO2/kWh scenario. Further funding is required to be on track to
around 50g/kWh as set out in Chapter 1 - Power.
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• Electricity transmission infrastructure. The National Infrastructure Pipeline has provision for £14.9
billion investment in onshore transmission, and a further £3.1 billion in offshore transmission.
• Electricity distribution infrastructure. The National Infrastructure Pipeline has provision for £20.8
billion investment in distribution infrastructure.
• Smart grid infrastructure. The National Infrastructure Pipeline includes a total £2.1 billion
investment to 2020, and a further £4.3 billion post-2020 for rollout of smart meters to domestic and
small non-domestic customers. The investment covers dedicated communications infrastructure, IT
systems upgrades across the energy industry and end-user smart meter equipment.
• CCS infrastructure. The National Infrastructure Pipeline includes the CCS Commercialisation
Programme covering both demonstration projects, with provision for around £0.9 billion
investment.
• Electric vehicle charging infrastructure. The National Infrastructure Pipeline includes the Roads
Investment Strategy, which sets aside £15 million between 2015-16 and 2020-21 for a national
network of electric vehicle charge points ensuring access to a charge point every 20 miles on 95%
of the Strategic Road Network.
• Flood defences. Flood defences will be very important in adapting to the impacts of climate
change. Flood defences, and other key infrastructure investment for adaptation are covered in
Chapter 2 on the built environment in the Adaptation Sub-Committee’s Progress Report on the
National Adaptation Programme.
District heating infrastructure is not currently included in the Plan, but additional capital funding and
regulation for heat networks should be considered as part of a plan to address the significant shortfall
in low-carbon heat. Developing the approach to the CO2 transport and storage infrastructure for CCS
will also be an important priority this Parliament (see Chapter 1 – Power).
We conclude that current plans for infrastructure spend appear broadly compatible with meeting
carbon budgets. Total planned expenditure is generally of the level required, and where available we
assess details on where this is being spent in Chapters 1-7. However, outside the power sector, without
more detail about the precise nature of spending in each of the above categories it is not possible to
say whether the private and public sector are delivering what is needed. Inclusion of District Heating
in the National Infrastructure Plan would confirm that Government intends to develop this important
option. We will seek to understand the nature of infrastructure spending in more detail ahead of our
next Progress Report.
Infrastructure in the devolved administrations
In Northern Ireland, Scotland and Wales, the split between the responsibility of the UK Government
and each of the devolved administrations for infrastructure policy and funding varies according to the
distinct devolution settlement in place for each administration.
In devolved areas, for example funding for flood defences, the devolved administrations are
responsible for prioritising and delivering infrastructure investment using the funding they receive
from the UK Government through their ‘block grant’ allocations. For non-devolved areas the devolved
administrations work closely with the UK Government to ensure the right infrastructure is delivered.
They have each published infrastructure plans which include programmes that could contribute
towards meeting UK carbon budgets:
• The Scottish Government is responsible for rail specification, roads, local transport, policy and
funding for flood defences, water and waste disposal. The Scottish Infrastructure Investment Plan
Overview 25
2011 sets out a pipeline of public investment in both economic and social infrastructure through to
2030, with investment of £21-26 billion. The plan aims to continue to work with the UK Government
to maximise the synergy of investment plans, particularly in terms of cross border investments as
well as sharing best practice. Scotland’s plan encourages initiatives to promote emission reductions
within the transport sector, including electric vehicle charging infrastructure. It also prioritises
investments for renewables infrastructure and prioritises consents for electricity generation and
transmission infrastructure. This also includes carbon capture technologies and the plan states that
Scotland wants to lead the world in CCS development.
• The Welsh Government is responsible for roads, local transport, policy and funding for flood
defences, water and waste disposal. One of the priorities of the Welsh Government in its
Infrastructure and Investment plan is to update the energy transmission and distribution network to
ensure that the new network is up to the challenges of the changing relationship between demand
and supply. The plan considers the need to increase the capacity of nationally and internationally
significant Welsh ports. Between 2015 and 2023, distribution network operators across Wales
are expected to invest £1.5 billion in their networks. Wales’ plan has climate change as a key
component (Box 2).
• The Northern Ireland Executive is responsible for rail specification, roads, local transport,
policy and funding for flood defences, water and waste disposal. Northern Ireland’s Investment
Strategy states that the Executive will support significant investment in the electricity grid and
interconnections to ensure that consumers benefit from the Single Electricity Market5, and in
wind energy. The plan also sets out that the Executive will work with utility companies to increase
renewable energy, and support major programmes for home insulation and smart metering to
reduce energy demands.
Box 2. Wales Infrastructure Investment Plan 2012
Wales’ Infrastructure Investment Plan 2012 sets out how Wales should consider the need to be resilient to future
pressures and avoid the worst impacts of climate change by cutting emissions.
The plan aims to ensure that proposals consider sustainable development and climate change knowledge. The plan
highlights the challenges of being sustainable in the construction sector and states that the Welsh Government and
industry will work together to ensure that they deliver environmental and low-carbon solutions when building homes
and other buildings.
Emissions from buildings in the domestic and public sectors alone account for over a quarter of Welsh greenhouse
gas emissions and the plan aims to drive improvements in the energy performance of buildings and processes to
tackle fuel poverty and deliver a low-carbon future. The plan also considers the impact of future climate change when
planning and investing in flood resilience.
Source: Welsh Government (2012): Wales Infrastructure Investment Plan for Growth and Jobs 2012
Impacts of the planned infrastructure spend on meeting carbon budgets
Concerns have been raised over the possible impacts of the planned infrastructure spend on meeting
carbon budgets, including:
• Embodied emissions: greenhouse gases emitted at each stage in the value chain of the
infrastructure provision, from extraction of raw materials, through transport and processing of
products and materials, to construction.
• Demand for fossil fuels: planned infrastructure, such as road building, could encourage particular
types of demand (e.g. for cars) that result in higher emissions than would otherwise occur.
5
26
The Single Electricity Market is the wholesale electricity market covering both Northern Ireland and the Republic of Ireland.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• Supply of fossil fuels: infrastructure spending includes specific expenditure on the extraction of
fossil fuels that contribute to greenhouse gas emissions.
We have considered the increase in emissions arising from these plans. We conclude that any increase
is likely to be small and manageable based on current evidence (Box 3). Under the Infrastructure Act
2015 we have a new duty to advise the Secretary of State about whether the exploitation of onshore
petroleum (including shale gas) is consistent with carbon budgets. We will undertake more detailed
research of this particular question ahead of that advice, due by 1 April 2016.
Box 3. Impact of the National Infrastructure Plan on GHG emissions
Impacts of infrastructure on GHG emissions include embodied emissions, increasing demand for fossil fuels, and
increasing supply of fossil fuels.
Embodied emissions
Embodied emissions are GHGs emitted at each stage in the value chain of the infrastructure provision, from extraction
of raw materials, through transport and processing of products and materials, to construction. These GHG emissions
would have an impact on achievement of carbon budgets if the investments:
• are additional to expected investments in the economy; or
• displace less carbon-intensive investments elsewhere in the economy.
Our advice on carbon budgets is underpinned by Government projections of energy demand and emissions. It is
difficult to assess whether the investments in those areas covered in the National Infrastructure Plan are consistent with
these projections.
This is an important question given the scale of construction required to develop the projects in the National
Infrastructure Pipeline. The Pipeline provides for an average annual expenditure of £45 billion between 2014 and 2020,
which is equivalent to 37% of construction sector output in 2014. This is significantly higher than historical expenditure
on infrastructure of around £30 billion per annum, suggesting that the lifecycle GHG emissions resulting from
deployment of the infrastructure could also be greater than historical levels.
The Centre for Industrial Energy, Materials and Products (CIE-MAP) at the University of Leeds has estimated the
embodied greenhouse gas emissions of the UK’s National Infrastructure Pipeline. The analysis estimates that the
National Infrastructure Pipeline contains around 174 MtCO2e of embodied emissions over the period to 2020/21, or 29
MtCO2e per year:
• Embodied emissions are the full supply chain emissions associated with the initial creation of an asset, including
emissions from raw material acquisition; transport, processing and manufacturing of building materials; distribution
of materials to site; and energy used on-site in assembly.
• This study estimates the emissions intensity for the emissions embodied in infrastructure per pound spent
(kgCO2e/£), based on the emissions intensity of the construction sector, with future intensity adjusted to account
for past trends. This relates to all the physical goods and services required along the construction sector’s supply
chains, whether produced in the UK or abroad, and accounts for different carbon intensities of production abroad.
• Overall, 244 MtCO2e are estimated to be embodied in UK infrastructure from 2014/15 if the desired level of
spending is met, or 174 MtCO2e over the period to 2020/21, with Energy and Transport projects responsible for the
bulk of embodied emissions.
Embodied emissions include emissions from overseas sources, and relate to greenhouse gases emitted through the
lifecycle of the infrastructure, rather than in a specific year. Therefore, 29 MtCO2e per year is the worst case scenario for
the impact on annual domestic GHG emissions. It is therefore likely that the scale of any impact of these embodied
emissions on carbon budgets will be small and manageable. As we develop our advice on the fifth carbon budget, we
will work with DECC to establish how far planned infrastructure investment is reflected in emissions projections.
Overview 27
Box 3. Impact of the National Infrastructure Plan on GHG emissions
There are likely to be actions that could be taken to reduce the scale of any impact – for example, techniques to
minimise the need to repair, maintain and replace road surfaces and so reduce future carbon emissions associated
with that activity. This has been recognised in HM Treasury’s Infrastructure Carbon Review, which sets out advice for
developers and operators of infrastructure assets. The Infrastructure Carbon Review calls for Government and industry
to work together to incorporate carbon reduction objectives within all their infrastructure projects and programmes
by 2016.
Any infrastructure project should consider how to minimise carbon emissions during its planning phase. This should
form part of the relevant formal requirements, for example included in the Environmental Impact Assessment. Where
public sector funding is involved, formal requirements should include explicit consideration of the level and social
cost of carbon emissions in assessing bids and choosing the winning approach to a particular project. The Committee
welcomes views for future reports about how best to deliver this requirement.
Demand for fossil fuels
As well as investing in measures to reduce demand for car travel, DfT has recently announced a series of investments in
the road network that are likely to slightly increase overall travel demand.
The National Infrastructure Pipeline includes the Road Investment Strategy, comprising around £15bn of expenditure
on 100 projects to improve the strategic road network between 2015 and 2021. Around £9bn of this is allocated to
road widening, smart motorways and junction improvements, with the remaining £6bn being used for resurfacing.
The investment is weighted towards improving existing roads, rather than building new roads – DfT estimates that the
investment will result in a less than 1% increase in additional lane miles on the network.
In its impact assessment, DfT estimate the additional traffic and associated CO2 emissions caused by these projects.
These investments are modelled as increases in capacity at specific points on the network which, they estimate, lead
to a 0.2% increase in vehicle-km and a 0.1-0.2% increase in CO2 emissions by 2040.
It should be noted that the National Transport Model is not designed to model the detail of small scale investments,
so it does not fully capture the impact of the Road Investment Strategy and is likely to underestimate the impact on
emissions. However, the impact appears small. DfT models would have to underestimate the additional traffic by an
order of magnitude for the Roads Investment Strategy to increase CO2 emissions by even as much as 1-2%.
Supply of fossil fuels
The National Infrastructure Pipeline includes £53 billion expenditure on capital costs relating to oil and gas fields and
associated infrastructure on the UK continental shelf for the years 2014-18. This figure excludes costs of exploration,
appraisal and decommissioning. This level of expenditure is consistent with historical levels (Figure B3):
While the National Infrastructure Plan summarises private investment in oil and gas infrastructure, this investment
responds in part to Government policy, such as taxation levels.
The question of what level of oil and gas extraction is consistent with carbon budgets and the climate objective is
complex. It requires careful consideration of various factors, including:
• The extraction rates consistent with meeting the climate objective at the global level, and the expected oil prices
consistent with these extraction rates.
• Costs of UK extraction relative to global oil prices.
• The degree to which domestic production of oil and gas might affect domestic consumption (in the case of
carbon budgets) and global consumption (in the case of the climate objective).
• Geopolitical and energy security considerations.
This question is particularly important given the objective set out in the Infrastructure Act 2015 of “maximising
the economic recovery of UK petroleum”. The Infrastructure Act also requires the Secretary of State to request the
Committee on Climate Change to provide advice on the impact of onshore petroleum (e.g. shale gas) on carbon
budgets and the 2050 target. We will therefore consider the impact of both onshore and offshore petroleum in a
report to be published in March 2016.
28
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Box 3. Impact of the National Infrastructure Plan on GHG emissions
Figure B3. Expenditure on oil and gas fields and associated infrastructure, 1970-2018
16
Pipeline
14
Historical
12
£ billion
10
8
6
4
2
0
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
Source: DECC (2014): Income from and expenditure on UKCS exploration, development and operating activities: annually 1970-2013; HM Treasury (2014): National
Infrastructure Plan Pipeline Spreadsheet: December 2014 Update
Note: Values exclude costs of exploration, appraisal and decommissioning
Source: Scott et al. (2015): Embodied greenhouse gas emissions of the UK National Infrastructure Pipeline; DECC (2013): Roads Reform Impact Assessment
4. Meeting the fourth carbon budget and preparing for the
2050 target
We set out in Section 1 that the UK was on track to meet the second and third budgets due to
accounting changes. In this section we focus on whether the UK is on track to the fourth carbon
budget and 2050 target, which have not been affected by these changes.
Emissions reductions expected from current policies
Our assessment is based on an update of analysis from our 2014 Progress Report to Parliament. In that
report we identified a large ‘policy gap’ between current policy ambition and the cost-effective path
that would meet the fourth carbon budget and prepare for the 2050 target:
• In 2014 we evaluated Government policies intended to reduce emissions against a set of criteria
(Box 4). This allowed us to identify those policies which are expected to deliver (classified as “lower
risk”) and those at risk of failing to deliver, either due to design and delivery problems, or because
they are currently unfunded. We also identified where policy is needed but currently there is none.
• Our assessment was that a significant amount of current ambition was at risk and that some parts of
the cost-effective path, particularly after 2020, had no policy to drive delivery. Even if at-risk policies
delivered in full, there would be a policy gap of 45 MtCO2e to the fourth carbon budget in the nontraded sector.
Our ‘cost-effective path’ was designed to include realistic take-up of those changes which can reduce
emissions at relatively low cost (e.g. improved energy efficiency of homes and vehicles) and/or are
required to prepare effectively for meeting the 2050 target (e.g. increasing uptake of electric vehicles
and heat pumps). Our updated assessment is that a similar amount of current ambition remains at risk
and policy remains to be developed for significant parts of our scenario for the cost-effective path.
Overview 29
The estimated gap to the fourth carbon budget appears to be smaller (i.e. 10-31 MtCO2e in a central
case). This reflects changes in the Government’s baseline projections, which are subject to significant
uncertainty (Box 5), rather than policy development.
Box 4. Criteria to evaluate level of risk in current policies
The criteria that we have used to assess policies are:
• Design and Implementation. We assess whether the design and implementation of the policy tackles the right
barriers; whether the policy has established a track record or there is evidence of similar policies working before;
and whether there are risks to the policy due to various factors such as lobbying, lack of coherence, or lack of
political support. We also assess whether the original impact assessment makes a prudent assessment of the level
of abatement delivered by the policy.
• Incentives. We assess whether the right incentives – monetary or regulatory – are in place for the policy to deliver
the necessary abatement.
• Funding. We assess whether, if required, there is adequate funding in place for the policy, both now and in
the future.
If policies meet all three criteria we would expect them to deliver and we have classified them as “lower risk”, whereas if
they fail any one of the criteria we classify them as “at risk”.
Box 5. DECC’s emissions projections and related uncertainty
Revised projections
Since our last report, DECC have significantly revised down their projection of emissions expected in the absence
of any policy to reduce them (i.e. the ‘baseline projection’). This means that the gap to the fourth carbon budget is
smaller than we estimated in 2014. It also means that implementation of the set of measures (e.g. insulation of homes,
starting to shift to low-carbon heating systems) identified by the Committee as being on the cost-effective path to
2050 may result in emissions that are lower than required under the legislated budget.
The reduction in the DECC baseline projection of emissions reflects changes in the non-traded and traded sectors:
• Non-traded sector: residential and LULUCF emissions have been revised downward due to lower household
projections, incorporation of Met Office predictions of warmer winters (reducing winter heating demand), and
inclusion of the impact of unmanaged forest in the projections.
• Traded sector: power sector emissions have been revised downward in the fourth carbon budget period as
coal-fired power stations are now assumed to allocate relatively more of their allowed operating hours under
the Industrial Emissions Directive in the second and third carbon budget periods, and less in the fourth carbon
budget period.
We will be working closely with DECC to fully understand these changes to the baseline.
Uncertainty in projections
DECC also report the impact of uncertainty in key model inputs (e.g. GDP, population, temperature) based on the 95%
confidence interval from a Monte Carlo analysis. Inevitably this analysis does not capture all possible uncertainties,
suggesting the full range of uncertainty is likely to be wider. For example, last year’s central projection falls outside of
the uncertainty range estimated this year (Figure B5).
For the non-traded sector, DECC estimate that emissions could be 6% higher or 8% lower than in their central case
over the fourth carbon budget period (Figure B5). For the traded sector, DECC estimate that emissions could be 13%
higher or lower than in their central case.
This uncertainty poses risks: that emissions will be higher than anticipated, such that the fourth carbon budget is not
met or greater effort is required to meet it; or that emissions will be lower than anticipated, such that carbon budgets
can be met through a level of effort that is insufficient to make adequate progress towards the 2050 target.
30
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Box 5. DECC’s emissions projections and related uncertainty
Monitoring progress
It is important therefore not only to assess the estimated gap to future carbon budgets, but also whether effective
policies are in place to deliver the measures included in the cost-effective path, which was designed in the face of
these uncertainties.
Figure B5. DECC’s estimated uncertainty range for non-traded sector emissions
400
350
95% confidence
interval
300
DECC projection
MtCO2e
250
Cost -effective path
200
Outturn
150
Fourth carbon budget
(non-traded)
100
DECC projection (2013) 50
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
0
Note: DECC (2014): Updated Emissions Projections 2014. These projections include the assumed impact of Government policies currently in place to reduce
emissions, assuming they all deliver in full.
Figures 5 and 6 set out the expected impact of policies against the cost-effective path to the
2050 target and the legislated carbon budgets, for the non-traded and traded sectors. A detailed
assessment of policies is set out in Technical Annex 1 – Overview.
Figure 5. Assessment of current and planned policies against future targets (non-traded sector)
400
Lower-risk policies
350
At-risk policies
300
Policy gap
Baseline emissions
MtCO2e
250
Cost-effective path
200
Outturn
Carbon budget
allowance
150
100
50
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
0
Source: DECC (2014): Updated energy and emissions projections: 2014; CCC analysis
Note: Allowed non-traded sector emissions are estimated; dotted line for second and third carbon budgets (2013-22) reflects that these are not consistent with
meeting the 2050 target, as set out in Section 1.
Overview 31
Figure 6. Assessment of current and planned policies against future targets (traded sector)
300
Lower-risk policies
250
At-risk policies
Policy gap
MtCO2e
200
Baseline emissions
Cost-effective path
150
Outturn
100
50
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
0
Note: Traded sector portion of carbon budgets not shown as these do not limit actual emissions in the traded sector
We estimate that roughly half of the abatement targeted by existing policies in the non-traded sector
is at risk, whilst no policies exist for a significant part of the cost-effective abatement that is available
during the fourth carbon budget period:
• Lower-risk policies are expected to deliver around 23 MtCO2e of abatement in 2025. These
include policies to improve the fuel efficiency of cars and vans, building regulations to improve
the efficiency of new build homes, and smart metering in the residential and commercial
buildings sectors.
• At-risk policies are responsible for delivering an additional 22 MtCO2e. These have design and
delivery problems or are currently unfunded. At-risk policies include the Agricultural Action Plan,
policies to improve the fuel efficiency of HGVs, the Renewable Heat Incentive post-2016, Zero
Carbon Homes and the Renewable Transport Fuels Obligation. It is critical that these policies are
strengthened to ensure that they deliver at their full potential.
• Policy gap. A further 28 MtCO2e of abatement is available in 2025 through opportunities to reduce
emissions at low cost or actions required to prepare for meeting the 2050 target that are not
targeted by current policies, but which ought to be pursued as part of good budget management.
These largely reflect that policies have not yet been developed for the 2020s.
• This compares to a total of 54 MtCO2e of abatement required across the non-traded sector in 2025
to meet the fourth carbon budget, or 92 MtCO2e to meet the cost-effective path.
In the traded sector, lower-risk policies (e.g. the Renewables Obligation and Contracts for Difference
that have already been signed) are expected to deliver around 94 MtCO2e of abatement across the
fourth carbon budget period. Policies we have assessed as at risk (e.g. the contract offered to new
nuclear but not yet funded, fuel switching away from coal) are targeting an additional 184 MtCO2e.
Current policy is not sufficient to meet the cost-effective path to the 2050 target; in this case the total
policy gap is 175 MtCO2e, reflecting that the Government has not yet stated its carbon objective for the
power sector in the 2020s or committed funding to achieve this.
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
The need for policy continuity
In summary, while carbon budgets have been legislated to 2027, in other respects the policy
framework for the 2020s is far from clear. Many current policies, or associated funding commitments,
are set to expire in the next few years (Table 3)6.
In order to close the policy gap and meet the cost-effective path the Government needs to extend
policies into the 2020s, to ensure that there is sufficient lead time for investors and consumers to
respond. The following new policies are required:
• Power: policies to deliver deployment beyond 2020, moving the power sector from 200 gCO2/kWh
in 2020 to 50-100 g/kWh by 2030.
• Buildings: policies to drive low-carbon heat beyond 2020 and residential energy efficiency beyond
2017 (e.g. insulation measures for cavity walls and solid walls).
• Industry: policies to drive low-carbon heat beyond 2020; to deliver further options in energyintensive sectors; and an approach to deploying initial industrial CCS projects, compatible with
widespread deployment from the second half of the 2020s.
• Transport: policy to address the upfront cost barrier of electric vehicles post-2020; to drive
passenger demand reduction beyond 2015-2016; and to reduce emissions from HGVs through
demand side measures beyond 2015.
• Agriculture: Policy to address emissions beyond 2022.
Many low-carbon investments have long lead times and payback periods. Efficient investment
planning requires that the policy framework within which decisions will be made is known well
in advance.
To enable appropriate investments, and in order to allow consumers and business to prepare, it is
necessary that the Government should extend existing policy approaches and funding commitments
as soon as possible.
A number of changes are also needed to deal with the risks to delivery for existing policies. We set
out our recommendations for strengthening existing policies and extending policies into the 2020s in
section 6.
6 Further details are set out in Technical Annex 1 – Overview and Chapters 1-7.
Overview 33
Table 3. Policy visibility in 2020s
Programme
End date
Power
Levy Control Framework
April 2021
Buildings
Energy Company Obligation
April 2017
Green Deal
No certainty over funding beyond 2015
Funding for Renewable Heat Incentive
April 2016
Industry
Climate Change Agreements
2020
Compensation for or exemption from climate
change policies
2019/2020
Transport
EU CO2 targets for cars and vans
2020
Electric vehicle support package to tackle financial
and non-financial barriers
2020
Local Sustainable Transport Fund
2015/16
Agriculture
Greenhouse Gas Action Plan (England only)
2022
Source: CCC assessment
34
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Low fossil fuel prices
Gas and oil prices fell significantly in 2014, and low prices have persisted into 2015, with average Q1
prices of 46 pence per therm for gas and $54 per barrel for oil.7 Gas prices are now consistent with
DECC’s low gas price projection, while oil prices are significantly below DECC’s low oil price projection
(Figures 7 and 8). The low prices have raised questions regarding the potential impact of fuel prices in
meeting carbon budgets.
Figure 7. Historical UK gas prices and DECC projections
120
Historical prices
100
DECC low
pence/therm
DECC central
DECC high
80
60
40
2030
2028
2026
2024
2022
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
20
Source: ICE UK natural gas contract; DECC (2014) Fossil Fuel Price Projections.
Note: Historical prices have been adjusted to 2014 prices using the GDP deflator.
Figure 8. Historical oil prices and DECC projections
200
Historical prices
180
DECC Low
160
DECC Central
$/barrel
140
DECC High
120
100
80
60
40
20
2030
2028
2026
2024
2022
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
0
Source: Europe Brent Spot Price (BP Statistical Review, 2014); DECC (2014) Fossil Fuel Price Projections.
Note: Historical prices have been adjusted to 2014 prices using the GDP deflator.
7 These are the units used by DECC in its standard reporting; 1 therm = 29.3 kWh, 1 barrel of oil = 1,700 kWh.
Overview 35
Lower fuel prices confer a significant economic benefit, but will tend to make carbon budgets more
difficult and relatively more costly to achieve:
• Consumers may increase their fuel use in response to lower prices. That would lead to higher
emissions and require more effort to meet the carbon budgets.
• The economic case for changes that reduce emissions may be weakened (e.g. insulation to save
heating costs may look less attractive if heating bills fall).
• The cost of low-carbon technologies relative to high-carbon alternatives will generally be higher
when fossil fuel prices are low.8
However, there are other reasons to suggest that the overall impacts may be limited:
• Fuel prices are highly variable, reflecting trends in demand, supply, and political circumstances, and
may return to higher levels. Since the relative cost of low-carbon investments are determined across
their lifetimes, future prices are also relevant.
• It is not clear how households/businesses respond to changes in fuel prices, which are only one
factor in decision making on energy use. For example, most estimates suggest consumers’ travel
demand is relatively unresponsive to price. 9
• The tax regime will tend to mute the impact of fossil fuel prices on consumer prices. For example,
on average, oil costs make up roughly 50% of petrol and diesel pump prices faced by consumers.
• As well as fossil fuel costs falling, some low-carbon technologies appear to be delivering at lower
costs than expected. For example, in auctions earlier this year wind power was contracted at a cost
16-18% lower than expected (Chapter 1 – Power).
We have assessed the impact of low fuel prices on the overall costs of carbon budgets and on the
required funding for low-carbon power generation:
• UK costs. We assessed the overall impact of different fuel price scenarios on the costs of meeting
carbon budgets in our advice on the fourth carbon budget. Our assessment was that the overall
cost of meeting the budget would be under 1% of GDP. This covered both central fuel prices (an
estimated cost of 0.6% of GDP) and ‘low’ fuel prices (which increased cost by around 0.1% of GDP
for the measures required to meet the budget).
• Global costs. While a “business as usual” path of increasing energy consumption is usually
associated with rising oil and gas prices, worldwide action to reduce GHG emissions would be
expected to significantly depress prices. While there is no evidence that the current decline in oil
and gas prices is due to such action, it is critical that governments recognise that future reductions
in prices will be the natural outcome of action to reduce emissions, and do not undermine the
economic case for doing so. If governments were to reassess the economic case for reducing
emissions as oil and gas prices decrease, such a shift would be self-defeating and impossible to
maintain, putting the climate objective at significant risk.
8
9
36
There are exceptions to this, for example the cost of carbon capture and storage is reduced by lower fuel prices, since much of the cost is in the extra input required to fuel the
capture process.
The Department for Transport estimates that a 1% decrease in fuel costs would increase the volume of car traffic by only around 0.3%, decreasing to around 0.17% by 2035 as demand
for road transport moves further towards saturation. See DfT (2013): Road Transport Forecasts 2013 – Results from the Department for Transport’s National Transport Model.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• UK policy. Lower gas prices could also raise a question as to how much low-carbon generation can
be supported under the Levy Control Framework, which caps the total support paid to low-carbon
generators. However, our analysis suggests that even under low gas and electricity prices, there
would be enough funding to meet our indicator trajectories, provided the budget is well managed
(Chapter 1 – Power).
The carbon budgets have been designed to be robust across a range of uncertainties, including
for fossil fuel prices. It is not clear that current low fuel prices will persist, but even if they do, the
carbon budgets remain achievable at costs accepted when they were legislated, and the conclusions
in relation to policy set out in this report still apply. We will continue to monitor fuel prices and
incorporate the full range of projections in our advice on the fifth carbon budget, due at the end of
this year.
5.
Public sector expenditure on meeting carbon budgets
In giving advice on carbon budgets we are required under the Climate Change Act to take account
of fiscal circumstances, and the impact of carbon budgets on taxation, public spending and public
borrowing.
The Spending Review 2010, published by HM Treasury, set out departmental spending plans for the
four years until 2014-15. Government will now need to consider expenditure on meeting carbon
budgets alongside other priorities for the new spending review period.
This section sets out estimates of public sector expenditure on meeting carbon budgets over the
financial years 2013/14 and 2014/15, specifically:
• Public sector expenditure on research, development and demonstration (Table 4)
• Current government support for roll-out, which is necessary to reduce emissions in the near-term,
and secure the innovation required in the medium- to long-term (Table 5)
• A detailed breakdown of these estimates is set out in Technical Annex 1 – Overview.
Table 4. Public sector expenditure on research and development (£m)
Sector
2013/14
Power
£195m
Buildings
£20m
Industry
£6m
Transport
£82m
Agriculture
£4m
Waste and other non-CO2
£1m
Cross-cutting
£53m
Total
£360m
Source: See Technical Annex: Overview
Overview 37
Table 5. Current government support for roll-out (£m)
Sector
2013/14
2014/15
£3,700m
£4,400m
Buildings
£930m
£500m
Sub-total
£4,600m
£4,900m
-
£3m
Buildings
£100m
£420m
Transport
£230m
£280m
Waste and other non-CO2
£770m
£800m
Cross-cutting
£50m
£50m
Sub-total
£1,200m
£1,500m
Green Investment Bank
[£660m]
[£790m]
Total
£5,800m
£6,400m
Levy-funded spending policies
Power
General taxation funded policies
Power
Source: See Technical Annex: Overview
Note: The UK Government is the sole shareholder in the GIB and has committed an initial £3.8 billion of public funds. However, the GIB expects the invested funds to
generate a positive return over the lifespan of projects. Also, GIB expenditure on power projects is included in our estimate of levy-funded spending on power. We
therefore exclude GIB spending from our total.
Overall, we estimate that:
• Public sector expenditure on research and development related to climate change mitigation
measures was around £360 million in 2013/14 – around 0.02% of GDP and 0.05% of total
Government expenditure (good data are not available for 2014/15).
• Current public support for the roll-out of particular technologies and associated innovation related
to climate change mitigation measures was around £5.8 billion in 2013/14, and around £6.4 billion in
2015/16, around 0.4% of GDP in each year:
– Support funded through energy bills was around £4.6 billion in 2013/14, and around £4.9 billion
in 2014/15 – around 0.3% of GDP in each year.
– Support funded through general taxation was around £1.2 billion in 2013/14, and around £1.5
billion in 2014/15 – around 0.1% of GDP and 0.2% of Government expenditure in each year.
This level of expenditure is consistent with what is required to meet carbon budgets in the near-term.
In order to meet the fourth carbon budget and achieve the cost-effective path to the 2050 target,
spending will need to increase. The increase helps to deliver the direct benefits of a reduction in
emissions, as well as indirect benefits in areas such as improved air quality. For example, Chapter 1 sets
out our recommendation for the level of the Levy Control Framework to 2025.
38
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
6.Recommendations
Given the overall picture of progress set out above, we identify priorities for Government leadership in
the transition to a low-carbon economy. These cover the three key issues in climate policy: investment
to support growth in low-carbon sectors, developing future options and enabling low-carbon choices:
• Low-carbon investment: Many low-carbon policies and funding streams have no certainty beyond
the next few years. That prevents efficient investment in low-carbon technologies and their supply
chains, which often have long lead-times and payback periods and in many cases are not yet
economic without Government intervention. To enable those investments, Government will need
to extend existing policy approaches and funding commitments into the 2020s. Specific examples
covered in this report include funding for low-carbon electricity, the approach to low-carbon heat
and energy efficiency in buildings and emissions regulations for vehicles.
• Developing future options and innovation: Many of the technologies that could contribute to
meeting the 2050 target are still developing in terms of their cost and performance, the ability of
suppliers and financiers to deliver them and the willingness of consumers to adopt them. Public
support in these areas should be targeted to areas that the market will not or cannot provide,
including some elements of R&D and infrastructure spending. To support private innovation,
Government must ensure that there is a clear future market for low-carbon products through
credible policy commitments that “price in” a rising cost of carbon. There is scope for substantial
benefits for UK industry which is well placed to compete in many areas of green innovation. Specific
examples include offshore wind, carbon capture and storage (CCS), low-carbon heat, electric
vehicles, and earlier-stage technologies that still need research, development and demonstration.
• Low-carbon choices: How lifestyles – which have changed considerably over the past 35 years –
continue to change and the decisions people make in response to new products will increasingly
determine whether we continue to reduce emissions. Government has a role to address barriers to
change, through effective policy design and evaluation to build the evidence base for “what works”.
Specific examples include setting incentives and information provision to increase take-up, for new
products such electric and low-emission vehicles, home insulation measures, and heat pumps, and
behavioural choices such as travel behaviour and food consumption.
This assessment leads to four main recommendations on mitigation for this Parliament:
1. Electricity: Ensure the power sector can invest with a 10-year lead time. As soon as possible, set
the Government’s carbon objective for the power sector in the 2020s and extend funding under the
Levy Control Framework to match project timelines (e.g. to 2025 with rolling annual updates).
2. Buildings: Develop plans and policies that deliver low-carbon heat and energy efficiency.
a. Develop an action plan to address the significant shortfall in low-carbon heat, ensuring a better
integration with energy efficiency and fuel poverty. Commit to the Renewable Heat Incentive to
2020, or until a suitable replacement is found.
b. Set out the future of the Energy Company Obligation beyond 2017, ensuring it delivers energy
efficiency while also meeting fuel poverty targets.
c. Implement the zero carbon homes standard without further weakening, ensuring investment in
low-carbon heat.
3. Transport: Maintain support for the up-front costs of electric vehicles, while they remain more
expensive than conventional alternatives, and push for stretching 2030 EU CO2 targets for new cars
and vans.
Overview 39
4. Infrastructure: Make decisions that help reduce emissions. A range of infrastructure decisions
to be made this Parliament could have significant impacts. Foremost amongst these is the need for
carbon capture and storage (CCS). Others include requirements for infrastructure support for heat
networks and electric vehicles. Decisions taken now need to avoid ‘lock-in’ to high carbon pathways.
Our full set of recommendations is set out in Tables 6 and 7. We have designed them to be specific
and measurable. We will monitor them closely, including the Government’s statutory response to this
report (due by 15 October 2015). In our 2016 Progress Report, we will review progress against each
recommendation and broader progress in closing the policy shortfall to the fourth carbon budget.
Table 6. Summary of recommendations – central Government
#
Recommendation
Owner
Deadline
DECC with HMT
Ahead of 2016
Progress Report
Power
1
Ensure power sector can plan on a 10-year cycle: as soon as
possible, set the Government’s carbon objective for the power
sector in the 2020s and extend funding under the Levy Control
Framework to match project timelines (e.g. to 2025 with rolling
annual updates)
2
Continue with auctions under Electricity Market Reform,
maintaining momentum by adhering to the proposed timings
and working with industry to learn lessons from the first auctions
DECC
Next low-carbon
auction by end2015
3
Set out approach to commercialise CCS through the planned
clusters: including a strategic approach to transport and
storage infrastructure, completing the two proposed projects
and contracting for at least two further ‘capture’ projects this
Parliament
DECC
Ahead of 2017
Progress Report
4
Support offshore wind until subsidies can be removed in the
2020s: set out intention to contract 1-2 GW per year and wider
innovation support provided costs fall with view to removing
subsidies in the 2020s
DECC
Ahead of 2016
Progress Report
5
Be transparent over the cost implications of technology
choices: including the cost of alternatives if low-cost options are
constrained, system integration costs and the full carbon cost of
fossil-fired generation
DECC
Ongoing, CCC to
review in 2016
Progress Report
6
Develop an action plan to address the significant shortfall in
low-carbon heat: short term this should commit to extend
the Renewable Heat Incentive to 2020, or until a suitable
replacement is found; long term it should link support for lowcarbon heat with energy efficiency, support for heat networks
and wider decisions about infrastructure for heat.
DECC
Ahead of 2016
Progress Report
7
Energy efficiency: set out the future of the Energy Company
Obligation beyond 2017, ensuring it delivers energy efficiency
while also meeting fuel poverty targets
DECC and DAs
Ahead of 2017
Progress Report
8
Implement commitments on Zero Carbon Homes for 2016:
implement zero carbon standards without further weakening
and ensure incentives are in place to encourage low-carbon heat
sources.
DCLG
Ahead of 2016
Progress Report
Buildings
40
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Table 6. Summary of recommendations – central Government
#
Recommendation
Owner
Deadline
9
Simplify policies for commercial energy efficiency: simplify and
rationalise wide range of existing policies for commercial energy
efficiency to strengthen incentives
DECC
Ahead of 2016
Progress Report
10
Develop joint work with industry into action plans: publish
plans setting out specific actions and clear milestones to move
abatement efforts forward along the paths developed with
industry in the “Roadmaps”
DECC
Ahead of 2016
Progress Report
11
Complete roll-out of “Roadmaps” to other industrial sectors:
taking account of lessons learned, roll-out roadmaps to industrial
sectors not covered in first wave
DECC
Ahead of 2017
Progress Report
12
Join-up industrial CCS with power sector projects: set an
approach to commercialisation of industrial CCS alongside the
approach adopted for the power sector, including ensuring
industry can link into planned infrastructure.
BIS with DECC
Ahead of 2017
Progress Report
13
Evaluate effectiveness of compensation to at-risk industries for
low-carbon policies: independent evaluation of industries that
are at-risk and effectiveness of the compensation framework
BIS
Ahead of 2017
Progress Report
14
Provide motor industry with greater certainty to 2030: push for
clear, stretching 2030 EU targets for new cars and vans that take
account of the need for ultra-low emission vehicles and use
realistic testing procedures.
DfT
Ahead of 2018
Progress Report
15
Tackle barriers to EV uptake: maintain support for upfront costs
while they remain more expensive than conventional vehicles;
provide a national network of charge points and roll-out local
incentives such as access to parking.
DfT with Local
Authorities
Ahead of 2017
Progress Report
16
Ensure the tax regime keeps pace with technological change:
align existing fiscal levers (e.g. Vehicle Excise Duty) to ongoing
improvements in new vehicle CO2, including a greater
differentiation between rates for high and low emission vehicles.
DfT with HMT
Ahead of 2017
Progress Report
17
Extend successful emissions-reduction schemes for freight
operations: larger freight operators have pioneered schemes to
reduce fuel costs and emissions that should be rolled out across
the industry, including small operators.
DfT with BIS and
industry
Ahead of 2016
Progress Report
18
Ensure lessons from schemes to reduce travel demand are
applied: sustainable travel schemes should be properly
evaluated and extended if they provide cost-effective emissions
reductions.
DfT
Ahead of 2017
Progress Report
19
Publish an effective policy framework for aviation emissions:
plan for UK 2050 emissions at 2005 levels (implying around a
60% increase in demand) and push for strong international and
EU policies
DfT
Ahead of 2016
Progress Report
Industry
Transport
Overview 41
Table 6. Summary of recommendations – central Government
#
Recommendation
Owner
Deadline
Agriculture and Land-Use
20
Deliver the Smart inventory to current timeline: the Smart
inventory is essential for effective measurement of emissions
from agriculture and should be delivered in 2016, without
further delays.
Defra
Ahead of 2016
Progress Report
21
Strengthen the current voluntary approach to reduce agricultural
emissions: farming industry to develop robust indicators to
properly evaluate the GHG Action Plan. Government to consider
stronger measures as part of its 2016 review if these cannot
assess the effectiveness of the existing scheme.
Defra
Ahead of 2016
Progress Report
22
Co-ordinate effort to reduce emissions from agriculture and
forestry: ensure measures being implemented across the four
nations are feasible, cost-effective and consistent with UK carbon
budgets.
DECC with
Devolved
Administrations
Ahead of 2016
Progress Report
Waste and Non-CO2
23
Scotland, England, Wales and Northern Ireland to set out
approaches to increase methane capture rates: as a devolved
matter, each nation should set out specific actions and clear
milestones
Defra and DAs
Ahead of 2017
Progress Report
24
Reduce biodegradable waste to landfill: each nation should set
out specific actions and clear milestones – including England –
to further reduce biodegradable waste to landfill.
Defra and DAs
Ahead of 2017
Progress Report
25
Find opportunities to exceed regulatory minimums on F-gas
abatement: including clearly assessing and addressing barriers
where evidence suggests cost-effective abatement above
minimum standards
Defra
Ahead of 2016
Progress Report
42
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Table 7. Summary of recommendations – devolved administrations
#
Recommendation
Owner
Deadline
26
Consider further action to facilitate heat networks: for
example, obliging local authorities to connect to existing local
networks and requiring consideration of network heat in new
developments.
Scottish
Government
Ahead of 2017
Scottish Progress
Report
27
Evaluate current energy efficiency schemes: focus particularly
on area-based schemes to better understand the most effective
way to implement supplier obligations once they become
devolved
Scottish
Government
Ahead of 2017
Scottish Progress
Report
28
Improve evidence on agricultural abatement: to include what
has worked under “Farming for a Better Climate” and whether its
measures have been taken-up beyond the focus farms
Scottish
Government
Ahead of 2016
Scottish Progress
Report
29
Develop a heat strategy: build on UK evidence and approach to
develop clear heat strategy for Wales including a renewable heat
target
Welsh
Government
2017
30
Prepare for higher ambition required of industry: plan ways to
reduce industry emissions, including consideration of voluntary
partnership agreements with industry and encouraging
innovative solutions
Welsh
Government
2018
31
Address non-financial barriers for electric vehicles: including
further measures which could be implemented such as parking,
use of priority lanes, raising awareness and public procurement
Welsh
Government
2016
32
Meet tree planting targets: consider whether further measures
are needed to ensure tree planting targets are met, and develop
approach jointly with stakeholders and other DAs
Welsh
Government
2016
Scotland
Wales
Northern Ireland
33
Consider further action to facilitate heat networks: for
example, obliging local authorities to connect to existing local
networks and requiring consideration of network heat in new
developments
N.I. Executive
2017
34
Improve monitoring of agricultural emissions: following Defra’s
delivery of the Smart inventory, put in place local monitoring
and process for acting on its findings
N.I. Executive
2017
35
Address non-financial barriers for electric vehicles: including
further measures which could be implemented such as parking,
use of priority lanes, raising awareness and public procurement
N.I. Executive
2016
Overview 43
Chapter 1: Progress decarbonising
the power sector
1. Overview of emissions
2. Performance against the
Committee’s progress indicators
3. Supporting infrastructure for lowcarbon generation
4. Forward look and policy gap
5. Recommendations
Key messages and recommendations
In this chapter we consider emissions from the electricity system and progress investing in new
low-carbon power generation and associated infrastructure in 2014. We outline priorities for
taking forward the policy framework to ensure we build on this progress and meet future carbon
budgets. The chapter includes new analysis on cost reduction potential for emerging technologies
(offshore wind, carbon capture and storage) and the Government’s role in supporting these.
Deep decarbonisation of the power sector by 2030 is central to emissions reduction across the
economy and meeting the UK’s legislated commitments at lowest cost, whilst ensuring that
security of supply is maintained. This reflects that:
• Power is a major source of emissions (around one quarter of total UK emissions).
• Low-carbon technologies are available for power generation which are or are likely to become
cost effective (i.e. cheaper than fossil fuel generation facing a rising carbon price).
• In the period to 2030 there will be significant capital stock turnover in the UK’s power system as
assets retire, creating an opportunity to replace this with low-carbon capacity.
• Low-carbon power can be used as a route to decarbonisation in other sectors (buildings,
transport and industry).
Through the Energy Act 2013, Parliament has recognised the need for rapid decarbonisation of
the power sector as a priority in moving to a low-carbon economy. The Act provides for longterm contracts that encourage low-carbon investment. This policy framework lays the foundations
for delivering decarbonisation of the power sector, whilst maintaining security of supply and
affordability for UK consumers.
Our key messages for the power sector are:
• There was strong progress in 2014. Power sector emissions fell by 18% between 2013 and
2014, the largest reduction in emissions in the power sector since reporting began in 1990.
This resulted from a fall in coal capacity on the system, strong renewables deployment and
output, decreased consumption and increased imports of electricity. In 2014, the emissions
intensity of UK electricity fell 12% to 442 gCO2/kWh, and the achievable emissions intensity
(which represents underlying structural progress in decarbonising power generation) fell 11% to
263 gCO2/kWh.
• Progress is set to continue to 2020. Deployment of renewables continues to make good
progress, particularly for onshore wind, offshore wind and solar power. There is sufficient
volume in project pipelines to maintain this momentum – projects already under construction
or contracted under Electricity Market Reform are sufficient to increase the renewables share
from 20% in 2014 to over 30% in 2020.
• There are significant risks beyond 2020. There remains a high degree of uncertainty about
the contracts that will be available to investors beyond 2020. This risks undermining further
progress as decisions are being made now over investments beyond 2020 and the supply chain
to support them. These risks are increased by delays in previous years to carbon capture and
storage and further delays this year to the new nuclear programme.
Chapter 1: Progress decarbonising the power sector 45
Key messages and recommendations
• Evidence on cost reduction is promising. Contracts awarded under the first auction for
low-carbon power were significantly cheaper than budgeted for (i.e. around 17-18% lower
than reserve prices for wind). The lower contract prices for offshore wind are consistent with
the latest evidence from industry on cost reductions. This evidence, alongside new analysis
we present in this report, confirms that in the 2020s multiple low-carbon technologies could
become cost-competitive with unabated coal or gas generation facing the full costs of their
emissions. Cost reductions in low-carbon technologies will only be achieved if there is sufficient
confidence in their future markets to allow private sector innovation to proceed.
• The Government should provide more confidence on power sector decarbonisation
beyond 2020. An unambiguous commitment to decarbonising the power sector is needed to
provide investors with confidence that there will be a market for low-carbon technologies in
the 2020s (e.g. to support supply-chain investment, development of new projects and create
the conditions for a competitive pipeline to drive cost reductions).
Our recommendations are:
• Ensure the power sector can invest with a 10-year lead time: As soon as possible, set the
Government’s carbon objective for the power sector in the 2020s and extend funding under
the Levy Control Framework to match project timelines (e.g. to 2025 with rolling annual
updates).
• Continue with auctions under Electricity Market Reform, maintaining momentum by
adhering to the proposed timings and working with industry to learn lessons from the
first auctions.
• Set out an approach to commercialise CCS through the planned clusters: including a
strategic approach to transport and storage infrastructure, completing the two proposed
projects and contracting for at least two further ‘capture’ projects this Parliament.
• Support offshore wind until subsidies can be removed in the 2020s: set out intention
to contract 1-2 GW per year and wider innovation support provided costs fall with view to
removing subsidies in the 2020s.
• Be transparent over the full cost of technology choices: including the cost of alternatives if
low-cost options are constrained, system integration costs and the full carbon cost of fossil-fired
generation.
46
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
1.
Overview of emissions
Emissions in the power sector were 121 MtCO2 in 2014, 26 MtCO2 (18%) lower than in 2013, the largest
single annual reduction in the power sector since reporting began in 1990. Between 2009 and 2014
power sector emissions declined on average by 4% per annum (Figure 1.1).
The large reduction was due to reduced UK generation as demand fell and imports rose, and a large
improvement in carbon intensity as generation shifted toward a lower carbon mix:
• There was a 7% fall in UK electricity generation in 2014, reflecting falling demand and increased
imports:
– Electricity demand fell by 13 TWh (4%) to 304 TWh. Relatively high temperatures drove a quarter
of this fall and there is evidence to suggest improved energy efficiency (and/or changes in
consumer behaviour) and changes in industrial energy use accounted for most of the remainder,
with a smaller contribution from increased embedded generation (i.e. rooftop solar).
– Net imports increased to 20.5 TWh in 2014 (up 42%) due to higher imports from France, making
up 6% of electricity supplied in 2014. Emissions from imported electricity are not counted in the
UK’s carbon account, but are covered by the EU Emissions Trading System (EU ETS).
• Emissions intensity fell by 12% to 442 gCO2/kWh as coal use went down and renewables generation
increased:
– Coal generation decreased by 23% to 95 TWh. Some coal plant closed permanently due to EU
air quality directives, and some converted to biomass generation, suggesting at least part of this
reduction may be permanent. It was supported by relatively low gas prices, which discouraged
switching from gas to coal generation.
• In 2014 1.2 GW of coal capacity closed and an additional 0.65 GW converted to biomass –
these units had generated 19 TWh in 2013.
• For the 20.2 GW of coal capacity that remained on the system, generation fell by 18 TWh as
load factors declined from 64% in 2013 to 52% in 2014.
– Renewable generation increased by 10 TWh to 60 TWh, mainly due to increased capacity,
particularly for onshore wind, offshore wind and solar power. Load factors for onshore wind and
offshore wind were 25% and 34% respectively, compared to an average of 24% and 28% during
the period 2009-20131.
– Although there were two significant nuclear outages in 2014, total nuclear generation over the
year was similar to the level in 2013 at 58 TWh (19% of UK generation).
Over half of the emissions reduction in the power sector in 2014 was due to reduced coal burn and
increased imports, while increased generation from low-carbon sources only accounted for a 4%
reduction in emissions. Towards 2030 almost all generation will need to be provided from low-carbon
sources in order to meet future carbon budgets. The rest of this chapter sets out the extent to which
this progress is likely to continue or whether additional actions are required to be on track to meeting
carbon budgets towards 2030 (Figure 1.2).
1
Adjusting for capacity entering operation during the year, load factors could be as high as 28% and 41% for onshore wind and offshore wind respectively in 2014, compared to an
average of 29% and 40% between 2009 and 2013.
Chapter 1: Progress decarbonising the power sector 47
Achievable emissions intensity
In order to identify underlying progress we also track Achievable Emissions Intensity – the emissions
intensity of the grid if it were operated to minimise emissions by first dispatching renewables and
nuclear, followed by gas and finally coal. This reduced from 297 gCO2/kWh in 2013 to 263 gCO2/kWh in
2014 due to increased deployment of wind, biomass and solar capacity, and a reduction in electricity
demand. This compares to an achievable emissions intensity of 462 gCO2/kWh in 2007 (Figure 1.3).
There is sufficient low-carbon capacity to meet almost half of demand in a typical year, and sufficient
gas capacity to meet the remainder except for a small number of peak hours during the winter when
a small amount of coal capacity would still be needed. If the grid had been dispatched in this way in
2014 then UK emissions would have been 48 MtCO2 (40%) lower.
Actual UK Emissions have been far higher than achievable emissions in recent years. However, we
would expect these to converge over time as the low-carbon share increases, as coal comes off the
system and as the carbon price faced by generators rises. The UK party leaders’ joint climate pledge2
confirms the direction of travel is to end the use of unabated coal for power generation. However
it remains unclear at this stage on what timeline this goal can be achieved, and whether through
existing EU air quality directives and/or other economic drivers.
Figure 1.1. Emissions intensity of electricity supply, electricity demand and CO₂ emissions from the power sector
(2007-2014)
Emissions intensity
600
gCO2/kWh
500
400
Power sector emissions
300
200
200
180
160
100
2007
2008
2009
2010
2011
2012
2013 2014(p)
MtCO2
140
0
120
100
80
60
Electricity consumption by sector
350
40
20
0
300
2007
2008
2009
2010
2011
2012
2013 2014(p)
TWh
250
200
150
100
Commercial and other final users
Residential
Industry
50
0
2007
2008
2009
2010
2011
2012
2013 2014(p)
Source: DECC (2015) Energy Trends; DECC (2015) UK Greenhouse Gas Emissions 2007-2014 (provisional); CCC calculations.
Note: Emissions intensity is UK based usable generation, i.e. excluding losses. Electricity consumption includes imported power. 2014 data are provisional.
2
48
Green Alliance (2015) Leaders Joint Climate Change Agreement. Available at: www.green-alliance.org.uk
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Figure 1.2. Actual power sector emissions compared with our indicator trajectory (2000-2030)
200
Actual emissions
Indicator trajectory –
50g/kWh
Indicator trajectory –
100g/kWh
180
160
140
MtCO2
120
100
80
60
40
20
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
Source: DECC (March 2015) Energy Trends; DECC (March 2015) Provisional 2014 results for UK greenhouse gas emissions and progress towards targets; CCC calculations.
Note: 2014 data are provisional. See section 2 for an explanation of our indicator trajectory.
Figure 1.3. Achievable emissions intensity (2007-2014)
Power sector emissions intensity (gCO2/kWh)
600
Actual emissions
intensity
Achievable
emissions intensity
500
400
300
200
100
0
2007
2008
2009
2010
2011
2012
2013
2014(p)
Source: CCC calculations based on DECC Energy Trends (March 2015).
Note: Achievable emissions intensity is the minimum average emissions intensity that could be achieved in a year, given the installed capacity of power sector
technologies, electricity demand and the demand profile of that demand. Emissions intensity is UK based useable generation, i.e. excluding losses. In 2015 we revised
the Achievable Emissions Intensity methodology to include emissions of 200 gCO2/kWh for electricity generation from biomass to reflect sustainability concerns, which
changes values in all previous years (this is not included in actual emissions intensity).
Chapter 1: Progress decarbonising the power sector 49
2.
Performance against the Committee’s progress indicators
The Committee’s approach to tracking progress
We track progress in the power sector against our detailed indicator framework, which we set out in
our first Progress Report in 2009 and revised in our 2014 Progress Report. Our power sector indicators
cover the overall policy approach, the deployment of low-carbon capacity that it supports (i.e.
renewables, nuclear and carbon capture and storage) and broader infrastructure:
• Policy: We monitor Government’s progress in implementing new market arrangements to
incentivise low-carbon investment.
• Renewables: We monitor actual deployment of capacity and resulting generation as well as
progression through the project development cycle, including planning.
• Nuclear: We monitor progress towards building a new generation of plants, including indicators on
planning and regulation.
• CCS: Our indicators for the first three carbon budget periods focus on progress with the UK’s
programme of demonstration projects, together with preparation for wider rollout in the 2020s.
• Infrastructure: We monitor progress in developing the transmission network (required
reinforcement, access to the network, investment in the onshore and offshore grid, interconnection),
alongside progress with rolling out smart meters and developing/procuring Demand-Side
Response (DSR) capabilities.
Taken together our indicators, if met, would put the UK on the path to a power sector that is largely
decarbonised by 2030, based on a portfolio of options and with the potential to support
decarbonisation of other sectors such as heat and transport.
Progress reforming the electricity market
The Energy Act 2013 provides for a system of long-term contracts for low-carbon generation, in line
with our previous advice. These provide revenue certainty to low-carbon investors, thereby increasing
confidence that investment will come forward at a lower cost to the consumer.
The implementing arrangements for the new market rules are now largely complete, culminating in
the first auction for low-carbon contracts, which completed in early 2015.
Low-carbon auctions
The first auction received a large number of bids and resulted in prices which suggest success in
driving down costs through competition:
• The total value of all bids into the auction was £1.2 billion, bidding for £0.3 billion of contracts.3 If the
remaining projects bid in to future rounds, these should also be competitive for at least the next
two years, with a need for new entrants to ensure continuing competition from 2018.
• Onshore wind contracts were signed at £79-82.5/MWh and offshore wind at £114-120/MWh. These
were 17% and 18% below the reserve prices for the auction. The results for onshore wind are
comparable to the lifetime cost for a new unabated gas plant built around 2020, provided it faces
the full cost of its emissions (e.g. as in the Government’s carbon values, which rise to £76/tCO2 by
2030). The results for offshore wind are consistent with the latest published estimated costs by
industry4.
3
4
50
DECC (2015). Contracts for Difference (CFD) Allocation Round One Outcome. Available at: www.gov.uk
Offshore Wind Programme Board (2015) Cost Reduction Monitoring Framework. Available at: www.ore.catapult.org.uk
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• The lower prices allowed 14% more generation to be contracted from the available funding pot
than if contracted at reserve prices.
• There were a small number of solar PV projects that were offered contracts but did not proceed,
suggesting some lessons to be learned in bidding behaviour.
To ensure continued success in low-carbon auctions, new projects will need to be developed so that
there continues to be more bidders than available contracts. However, there is a risk that development
is restricted by the current high level of uncertainty over the direction for the sector beyond 2020. We
make a number of recommendations to address this in section 5.
More broadly, as this was the first auction under a new regime, we would expect some learning in
implementation. The Government should work with industry to identify this learning and ensure that it
is reflected in the next set of auctions.
Capacity Market auctions
The first auctions in the UK’s new Capacity Market, which aims to ensure security of supply for the UK
electricity system, also proceeded recently. The first auction took place in early 2015 and secured its
target capacity:
• 49 GW of capacity was contracted for the period beginning 2018/19, as targeted by DECC5 from a
pool of 62.5 GW of prequalified bidders.
• The auction cleared at a price of £19.40/kW, compared to an auction cap of £75/kW.
• Only a small amount of the contracted capacity is new build capacity (5%). However the high level
of liquidity in the auction (e.g. number of bidders) suggests that more capacity would be available if
required.
• 2 GW of small-scale generation plant (mostly diesel- or gas-fuelled) was contracted that is not
subject to emissions constraints under the EU ETS. If running at low load factors we would expect
these generators to have limited emissions impacts. We will continue to monitor the participation
of carbon-intensive small-scale generators in the capacity market, and in other markets, and any
emission implications they may have.
• Capacity market auctions will continue on an annual basis in order to secure capacity for delivery
four years later. Alongside these ‘four year ahead’ auctions, capacity auctions for delivery one year
after the auction will take place, the first of which will be in 2017/18.
We will continue to closely monitor the implementation and development of the new market
arrangements.
Deployment of renewable generation
In 2014, around 20% of electricity generated was from renewables (60 TWh), up from 16% in 2013
(50 TWh) and 5% in 2007 (19 TWh). Total installed capacity for renewable generation reached 25 GW.
Contracts have been signed for around 6.5 GW of renewable capacity to come online by 2020,
indicating that the UK should be on track to meet a goal of at least 30% of electricity generated by
renewable energy sources in 20206. Investment in low-carbon generation in the UK is comparable to
other European countries (see Box 1.1).
5
6
DECC (2014) Update to the target capacity for the Capacity Market Auction. Available at: www.gov.uk
The EU’s Renewable Energy Directive requires that 15% of the UK’s primary energy demand comes from renewable energy sources in 2020. Estimates suggest that this translates
to at least 30% of electricity generated that year by renewables. DECC (2009) National Renewable Energy Action Plan for the United Kingdom. Available at: www.gov.uk
Chapter 1: Progress decarbonising the power sector 51
In this section we consider progress and delivery risks for the following renewable technologies –
onshore wind, offshore wind, biomass, solar. Additional detail on each of these technologies, and on
wave and tidal technologies is provided in the technical annex.
Box 1.1. International/European investment in renewable generation
Global clean energy investment was $310 billion in 2014, a 16% increase on 2013, and included investment in
hydropower, solar, biomass, biofuels, wind power, and wave and tidal power.
• The Asia Pacific region accounted for 50% of this investment (of which China was just over half), with the EMEA
(Europe, Middle East and Africa) and the Americas each accounting for 25%.
• The UK invested $15.2 billion (£10 billion) in clean energy, a similar level to Germany and twice that of France, and
represented 5.1% of total global investment. In our 2013 Fourth Carbon Budget Review we suggested that power
sector investment in the UK should average around £10-15 billion per annum to 2020 in order to decarbonise the
power sector.
In capacity terms, the UK installed 2.5 GW of solar, 0.8 GW of onshore wind and 0.8 GW of offshore wind in 2014,
bringing total renewable energy capacity to 24.2 GW. Other European countries are also active in these markets, whilst
China is rapidly developing its offshore wind market.
• Onshore Wind: France and Germany added 1 GW and 5 GW of onshore wind capacity respectively.
• Solar PV: With 2.5 GW added in 2014, the UK was Europe’s largest market for solar PV. Germany installed 1.9 GW
(bringing its total installed capacity to 38.5 GW) and France installed 0.9 GW (bringing its total installed capacity to
5.7 GW) as part of a European market of 7 GW.
• Offshore Wind: Germany added 0.5 GW of offshore wind last year and announced plans to install 6.5 GW of
offshore wind by 2020; it is expected to install 2 GW in 2015. Additionally China, which has 0.7 GW of operational
offshore wind, is expected to add 0.8 GW of capacity in 2015 as part of a target to add 30 GW of offshore wind by
2020. The expected global offshore wind market in 2015 is 3.9 GW per annum, of which the UK will account for
about 25%.
Source: Enerdata (2015) Wind Regains Momentum in 2014 and Industry Outlook Improves; Available at: www.energy.globaldata.com; BNEF (2015) Global Trends in Clean
Energy Investment. Available at: www.bnef.com; IEA (2015) Photovoltaic Power Systems Programme Statistic Reports. Available at: www.iea-pvps.org.
The combination of capacity that has already been installed, contracted or is in construction suggests
that our indicators for renewables in 2020, specifically onshore and offshore wind, can be met with only
a small addition from projects that have already been consented (Table 1.1, Figures 1.4-1.5). To the extent
that more capacity is needed, this could come from projects in the planning pipeline (see Technical
Annex).
52
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Table 1.1. Overview of renewable deployment in 2014
% of UK
Generation
in 2014
Average
Load
Factor
(%)1
Installed
Capacity
(2014)
Of which,
capacity
added in
2014
Further
capacity in
Pipeline2
CCC
Indicator
capacity in
2020
Current3
cost
estimates
(£/MWh)
Onshore
wind
6%
26%
8.3 GW
0.8 GW
2 GW
13 GW
£80/MWh
Offshore
wind
4%
37%
4.5 GW
0.8 GW
5.4 GW
11 GW
£115/MWh
Biomass
7%
83%
3.4 GW
0.4 GW
2.1 GW
-
£100/MWh
Solar
1%
10%
5.2 GW
2.4 GW
0.8 GW
-
£80/MWh
Tidal Stream
<1 %
31%
<0.1 GW
-
-
-
£100-200/
MWh
Wave
<1 %
31%
<0.1 GW
-
-
-
£200-300/
MWh
0%
-
0 GW
0
-
-
£115/MWh
Technology
Tidal lagoons
1
T he Average Load Factor is defined as the total generation of a technology during the year as a proportion of the generation that would be provided if capacity was
generating 100% of the time. We estimate average load factors based on end year capacity, which may under estimate true technology load factors, if capacity is
added during the year. Load factors for onshore and offshore wind are for CCC indicators, load factors for other technologies are from DECC (2013) National Grid EMR
Analytical Report. Available at: www.gov.uk.
2
warded a CfD, or under construction. There are also many projects at an earlier stage of development, including 0.3 GW of tidal lagoons in discussion with the
A
Government over a possible contract.
3
Generating in 2016-8 for wind, biomass, solar; 2020 for tidal stream & wave; early 2020’s for tidal lagoons. Italics are cost estimates, non-italics are auction results.
In the specific case of onshore wind there is a large pool of projects (5.2 GW with planning permission
and 7.3 GW seeking approval) that could add to the 10.5 GW already constructed, under construction
or contracted. Alongside large-scale solar PV, onshore wind appears to be one of the lowest cost lowcarbon options available for electricity production.
The Government has announced its intention to close the Renewables Obligation (RO) for new
onshore wind projects from April 2016. Given the relatively short lead time, the Government must
ensure this is not perceived as a retrospective change by investors. Plans to apply a grace period for
projects already underway could achieve this, provided it sufficiently covers projects that have already
incurred significant expense.
The Government should also clarify its intentions for treatment of onshore wind in the competitive
low-carbon auctions. The long-term contracts themselves are not subsidies, and contracts awarded
to onshore wind in the first auction were significantly cheaper than projects supported by the RO and
close to subsidy free. In section 5 we recommend that subsidy is judged against the full cost of highcarbon alternatives and that the Government is transparent over the cost to consumers if low-cost
options like onshore wind are constrained.
In our 2014 Progress Report we suggested a cautious approach be taken to biomass and solar
generation, given questions relating to the sustainability of biomass feedstocks and the seasonality of
solar generation (and any associated costs to the electricity system). These remain unresolved, whilst
there has been strong progress developing capacity in both areas:
Chapter 1: Progress decarbonising the power sector 53
• Biomass sustainability.
– Electricity generated from biomass feedstocks has increased from 9.6 TWh in 2009 to 20.1 TWh
in 2014, mostly due to coal stations converting to biomass. Biomass offers a relatively low cost
route towards meeting the EU Renewable Energy Target for 2020 and is likely to increase further
over the next five years. For biomass to offer genuine emissions savings, the feedstock must
come from sustainable sources.
– In our 2014 Progress Report to Parliament we recommended that the Government should add
to the UK’s criteria for biomass sustainability, in its 2016/17 UK Bioenergy Strategy Review, a
requirement that all biomass (i.e. both new and existing capacity) is sourced from forests that can
demonstrate constant or increasing carbon stocks, and push for this to be reflected in standards
at the EU level. Some progress has been made. The Government issued new sustainability
criteria last year (Timber Standard and Woodfuel guidance) including the implicit requirement
that generators receiving incentives under the Renewables Obligation, Renewable Heat Incentive
(RHI) and Contracts for Difference (CfDs) must demonstrate that biomass is sourced from forests
that are being managed in a way to maintain/enhance carbon stocks. We will monitor the
impact of the new criteria, which will come into effect in Autumn 2015.
• Solar seasonality.
– Solar costs have fallen quickly and capacity has expanded. Solar accounted for 4 TWh (1%) of
generation in 20147 following rapid expansion in the last two years. This is split between largescale ground-mounted installations, which are relatively cheap with costs similar to those for
onshore wind (i.e. new installations could be deployed at around £80/MWh), and smaller rooftop
installations, which despite falling costs remain relatively expensive (e.g. in 2014 these received
feed-in tariffs up to £140/MWh, not including export tariffs)8.
– DECC closed the RO to solar projects larger than 5 MW in April 2015. Under the RO, solar
projects could earn up to around £100/MWh, significantly more than their costs required.
Projects of this size are still eligible for contracts under EMR if they are able to out-compete
other low-carbon technologies. DECC should work with the industry to ensure that this route
to market is genuinely open for solar projects, which are often smaller than those of competing
technologies.
– Given the high price paid to solar PV projects funded by Feed-in Tariffs (FiTs), committed projects
accounted for around 15% of the funding available for low-carbon technologies in 2014, but less
than 5% of the generation under the Levy Control Framework. The Government should continue
to closely monitor FiTs spend to ensure that it does not crowd out other, cheaper technologies
which compete for available funding.
– As we raised in last year’s report, there is a question as to how much solar can be efficiently
accommodated in the UK grid given solar output is poorly matched to UK demand (i.e. solar
output is high in summer but demand is high in winter). Alongside the rapid reductions being
observed in costs, this raises a question over how much capacity should be installed now and
on rooftops rather than later when costs could be lower. That must be balanced against the
value in maintaining the existing industry and enabling cost reductions in installation. We will
consider these aspects further, including the potential contribution of seasonal storage, when
designing scenarios for our advice on the fifth carbon budget later this year.
7
8
54
Of which we estimate about 70% was exported to the electricity grid in 2014.
Ofgem (2014) Feed-in Tariff Scheme: Tariff Tables. Available at: www.ofgem.gov.uk
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Overall, renewables deployment appears on track to 2020. However, there is a risk that the value of this
progress will be lost if more confidence is not provided beyond 2020. We return to this issue and how
to resolve it in section 5.
Figure 1.4. Onshore wind: annual additional and cumulative capacity against our indicators (2008-2030)
Onshore wind: additional capacity
Onshore wind: total installed capacity
2.5
30
25
20
1.5
GW
1.0
10
0.5
5
0
2008
2009
2010
2011
2012
2013
2014(p)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0.0
15
Actual
2008
2009
2010
2011
2012
2013
2014(p)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
GW
2.0
Indicator range
Actual
Approved
Operational
Indicator range
Source: DECC (March 2015) Energy Trends; Pöyry (2013) Technology Supply Curves for Low-Carbon Power Generation; CCC estimates.
Note: 2014 data are provisional. Other indicators begin from 2007, however for renewables a consistent data set is only available from 2008.
Figure 1.5. Offshore wind: annual additional and cumulative capacity against our indicators (2008-2030)
Offshore wind: additional capacity
Offshore wind: total installed capacity
5.0
45
4.5
40
4.0
35
30
3.0
GW
2.5
2.0
25
20
15
1.5
10
0.5
5
0.0
0
2008
2009
2010
2011
2012
2013
2014(p)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
1.0
Actual
Indicator range
2008
2009
2010
2011
2012
2013
2014(p)
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
GW
3.5
Actual
Approved
Operational
Awarded CfD
Indicator range
Source: DECC (March 2015) Energy Trends; Pöyry (2013) Technology Supply Curves for Low-Carbon Power Generation; CCC estimates.
Note: 2014 data are provisional. Other indicators begin from 2007, however for renewables a consistent data set is only available from 2008. Volatility in offshore wind
additional capacity indicator to 2020 reflects expected dates that specific projects in pipeline commence operation.
Deployment of new nuclear generation
New nuclear power may play an important role in decarbonising the power sector through costeffective baseload low-carbon generation. Of the existing 9 GW nuclear capacity on the system
(which provided 19% of UK generation in 2014), 8 GW is set to come offline over the next 15 years.
A continued contribution of nuclear power to low-carbon electricity generation therefore relies on a
programme of nuclear new build. Last year we noted ongoing delays in the new nuclear programme.
Chapter 1: Progress decarbonising the power sector 55
While important milestones for new nuclear projects were passed in 2014, a Final Investment Decision
on the first new build nuclear plant is still pending:
• The UK’s first new build nuclear power station since 1995, Hinkley Point C, received State Aid clearance
from the European Commission in 2014. However a Final Investment Decision on this project has been
pushed back to later in 2015 due to legal challenges and ongoing contractual negotiations.
• Other new build nuclear projects passed important milestones in 2014:
– Horizon’s Advanced Boiling Water Reactor (AWBR) received parliamentary justification, the first
step in the regulatory process.
– The Government extended its infrastructure guarantee scheme to NuGen’s Moorside project,
with the aim of providing financial security to investors in the project.
– The Generic Design Assessment (GDA) process continues for reactors for both of these
developers, with decisions expected in 2018 and 2019 respectively; plant operation is expected
to commence in the mid-2020s.
In order for a successful programme of new nuclear plant to be deployed, projects need to deliver to
time and budget. If costs rise and the benefits of a programme do not translate into lower costs than
for the first plant (i.e. £92.50/MWh, which has been agreed for Hinkley Point C) then the value of a
nuclear programme could be called into question, particularly if other low-carbon options are making
good progress.
There may be some scope for life extensions to existing plants to provide nuclear generation over the
fourth carbon budget period. In 2014, EdF announced an extension to its Dungeness B power station
that will be able to provide low-carbon generation to 2028. EdF suggests that an average lifetime
extension of seven years across its fleet is achievable9, which could allow 4-5 GW of existing nuclear
power to stay online until the late 2020s, subject to regulatory approval.
Any further delays to new nuclear build may reduce the contribution it can make towards sector
decarbonisation. We will reflect this possibility in developing scenarios for our advice on the fifth
carbon budget (2028-2032), due by the end of 2015.
Commercialisation of CCS
Carbon Capture and Storage (CCS) is likely to be a crucial part of a least-cost path to decarbonisation
in the UK, and globally. As a low-carbon and potentially flexible form of generating capacity, CCS
can provide a back-up role for variable renewables and help to manage swings in demand. CCS also
has a crucial role in decarbonising heavy industry where there are limited options, and in the longer
term would help to maximise the emissions reduction obtained from scarce supplies of sustainable
bioenergy as well as opening up other decarbonisation pathways (e.g. based on hydrogen). Estimates
by the Energy Technologies Institute (ETI) and the Committee10 suggest that the cost of meeting the
UK’s 2050 emissions target would approximately double in the absence of CCS deployment.
CCS has taken positive steps towards being proven globally, with the first “at scale” CCS power
demonstration project (a 110 MW post-combustion coal plant retrofit) commencing operation at
Boundary Dam in Canada in 2014. There has also been an increase in the number of active projects,
with 22 CCS projects now in construction or operation, a 50% increase since 201011, although questions
remain over whether the flow of projects is sufficient.
9
10
11
56
EdF (2012) EdF Press Release. Available at: www.press.edf.com.
ETI (2015) Carbon Capture and Storage, CCS could clear a path to the UK’s carbon reduction targets. Available at: www.eti.co.uk; CCC (2014) Fourth Carbon Budget Review – Part 2.
Available at: www.theccc.org.uk.
GCCSI (2014) The Global Status of CCS: 2014. Available at: www.globalccsinstitute.com
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Cost estimates for CCS have increased in recent years. In 2011 costs for early plants were estimated to
be £60-150/MWh, more recent estimates put the cost at around £150-200/MWh (Boundary Dam was at
the higher end of this range).12 An updated assessment by ETI suggests that there remains potential for
CCS to compete with other low-carbon electricity generation technologies during the 2020s. However,
these cost reductions are reliant on Government measures to encourage sharing of infrastructure and
developing appropriate risk-sharing arrangements around storage and other liabilities (see section 5).
In our first report in 2008 we set out that CCS urgently needs to be proven and commercialised in the UK,
and our original indicators reflected this with the first plant coming online in 2014 and multiple plants by
2020. Progress has been slow with the first projects now aiming to commence operation by 2020:
• Government support has been provided for two plants to conduct Front End Engineering and
Design (FEED) studies: White Rose in Yorkshire (a 304 MW oxy-fuel coal project) and Peterhead in
Aberdeenshire (a 340 MW post-combustion CCGT retrofit). FEED studies are aiming to conclude
and take positive investment decisions in 2015 (alongside capital funding from Government). These
plants could then commence operation by the end of the decade.
• A 570 MW pre-combustion coal facility at Caledonia Clean Energy project in Grangemouth
(formerly known as the Captain Clean Energy project – one of the reserve projects from the DECC
Commercialisation Programme), has recently been awarded £4.2 million funding for research and
feasibility studies.
CCS spans different fuels and technology types (e.g. gas or coal; pre- or post-combustion and oxyfuel). The aim of the CCS programme should be to develop more of the lowest-cost fuel/technology
combinations, while taking into account strategic considerations such as the development of clusters
to share infrastructure and enable extension of the network to industrial CCS projects.
The UK’s initial project mix appears broadly sensible. White Rose is a coal project that includes a large
CO2 transport pipeline that allows for follow-on projects and Peterhead is a gas project re-using
existing infrastructure. Both are well placed to connect future sites from industry. It will be important
for these projects to proceed in order to provide momentum and a platform for a wider UK CCS
industry to develop.
The urgent need to develop CCS, together with the significant delays in deployment to date, suggest
that follow-on projects need to be developed alongside initial deployment (e.g. decisions on a second
phase of projects should be made over this parliament). DECC’s recent Phase II scoping document
considers this at a high level, but further work is required to translate this into implementation (see
section 5).
12
CCC (2011) The Renewable Energy Review. Available at: www.theccc.org.uk; Pöyry (2015) Potential CCS Cost Reduction Mechanisms. Available at www.theccc.org.uk.
Chapter 1: Progress decarbonising the power sector 57
3.
Supporting infrastructure for low-carbon generation
The transition to a low-carbon electricity system places new demands on electricity infrastructure and
system security. This is due to both higher levels of variable renewables and inflexible generation (e.g.
nuclear) as well as increased demand during peak periods as low-carbon electricity is extended to new
markets (e.g. via the electrification of vehicles and heat in buildings).
Transmission infrastructure – investment and access
Our indicators for transmission investment are based on the major network upgrades identified by the
Electricity Network Strategy Group (ENSG) in 2009. Our transmission indicators are also in line with a
more recent assessment commissioned by the Committee on the upgrades to both transmission and
distribution infrastructure required to accommodate low-carbon generation towards 2030.13
Of the six ‘Stage 1’ assets identified by the ENSG in 2009,14 just one has been installed in 2014, although
delays in the development of the remaining assets are largely down to shifting demand for these
assets. Increased microgeneration across the UK, alongside the deployment of distribution connected
solar and wind farms are already creating grid integration issues. A more integrated approach
to planning across the transmission and distribution system could be required in order to avoid
unnecessary costs to the electricity system:
• In North Wales, the first part of the Stage 1 transmission upgrade was completed in 2014. Upgrade
completion dates for the three remaining parts of these upgrades were pushed back due to revised
generation connection dates of renewables, and the connection date of Horizon’s Wylfa nuclear
power station.
• The West coast ‘bootstrap’ (a large transmission link off the West coast of the UK) is on track to be
completed by 2017.
• Completion dates for other stage 1 assets have been pushed back towards 2020 and beyond,
primarily due to changes in the dates when generation assets are expected to come online.
Ofgem’s Integrated Transmission and Planning Regime project concluded in early 2015, with important
implications for the transmission network. The remit of the System Operator, National Grid, has been
expanded to include publishing plans for the electricity transmission system covering England,
Wales, Scotland, interconnection and the offshore transmission regime. Meanwhile, recent experience
suggests that grid integration issues of low-carbon technologies may be causing problems on the
electricity distribution networks of the UK (e.g. distributed solar in South West England). Whilst a wider
system outlook is certainly desirable, Ofgem and National Grid should continue to monitor the need to
address planning challenges encompassing both the transmission and distribution networks.
Infrastructure to support increased system flexibility
Flexibility over the timing of electricity generation and demand is important for security of supply in
an electricity system with high levels of variable renewable generation and inflexible generation such
as nuclear. Flexibility is needed to maintain security of supply by ensuring power is always available
when needed and to ensure that electricity generated (e.g. wind and solar) can be accommodated, for
instance, during periods of low demand.
As more low-carbon generation is added, more flexibility will be needed to balance the system and run it
efficiently. Policy and market design must therefore ensure that flexibility services, including demand-side
options, can enter the market and compete effectively, while having net emissions benefits.
13
14
58
Imperial College and Element Energy (2014). Infrastructure in a low-carbon energy system to 2030: Transmission and distribution. Available at: www.theccc.org.uk.
ENSG (2009) Our Electricity Transmission Network: A Vision for 2020. Available at: webarchive.nationalarchives.gov.uk
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We therefore monitor progress in the installation of smart meters (which can support increased
flexibility through demand-side response), participation of demand-side response in various markets,
and interconnection with Europe, which can effectively share sources of flexibility:
• Smart meters: Smart meters provide more accurate information to energy users and utilities about
their consumption and enable consumers to change the time at which they use electricity. At
the end of 2014, just over 400,000 smart electricity meters were operating in residential homes,
representing less than 2% of domestic properties. Delays in setting up the data infrastructure
around the smart meter programme mean that the mass rollout of smart meters is now expected
to commence in the second half of 2016, however the rollout is still expected to complete by the
end of 2020. The meters being installed have sufficient functionality to reflect real-time prices and
allow either direct consumer responses or automated services via third parties.
• Demand-side response: The concept of shifting electricity demand (e.g. away from ‘peak’ time
periods such as 4-7pm on a winter evening) is known as Demand-Side Response (DSR). DSR – both
direct demand shifting and use of small-scale diesel or gas generators at peak times – can help
manage large volumes of variable renewable generation and can significantly reduce the overall
cost of a decarbonised system (e.g. by shifting demand to off-peak periods with higher renewable
output). It is already participating in several UK markets:
– 320 MW of DSR flexibility was contracted during the winter of 2014/15 under the Demand Side
Balancing Reserve, of which an estimated 40% was demand shifting (versus fossil-fuel generation).
To ensure net emissions benefits, it is important that DSR flexibility is increasingly provided by
demand shifting and not fossil-fuel based generators. We will monitor this over time.
– 174 MW of DSR flexibility was contracted in the first Capacity Market auction (covering the period
2018/19), with the role of DSR expected to increase in subsequent auctions.
– Other schemes, such as the Transitional Arrangements, exist to look at the participation of
demand-side response in UK electricity markets.
• Interconnection: Interconnection to other electricity markets can help manage variability of
demand and supply and reduce system costs by taking advantage of differences between linked
jurisdictions. The UK has 4 GW of interconnection capacity. There has been progress in 2014 towards
a significant expansion in interconnector capacity between the UK and other markets, suggesting
up to around 7 GW of additional interconnection capacity (to Norway, Denmark, France and
Holland) could be developed in the period to 2020, with potential to go further (e.g. to a total of
around 18 GW) by 2030.
As part of our work later this year on the fifth carbon budget, we will update our detailed assessment
of the security of supply challenges of managing a decarbonising electricity system and the
importance and potential of flexibility options. We will also consider the extent to which the value
of flexibility (e.g. for demand-side response and energy storage) is reflected by current market
mechanisms and can be captured in the value chain.
Chapter 1: Progress decarbonising the power sector 59
4.
Forward look and policy gap
In our 2014 Progress Report we highlighted the ‘policy gap’ between what current policies can be
expected to deliver, and the cost-effective path to meeting the UK’s overall 2050 emissions target (i.e.
to reduce greenhouse gas emissions by at least 80% compared to 1990). While there has been some
progress in closing the policy gap over the past year, a significant gap remains beyond 2020.
• We have updated our analysis (Table 1.2 and Figure 1.6) since last year to reflect actual 2014 grid
intensity, changes to the DECC ‘no policy’ baseline and the recent CfD auctions:
– The baseline has changed to reflect electricity capacity changes in 2014 and DECC’s latest
Updated Emissions Projections.15
– Successful auctions for low-carbon generation secured more than 2 GW of low-carbon capacity for
installation pre-2020. We have revised our classification of this capacity from ‘at risk’ to ‘lower risk’.
• However, significant risks remain for delivery of projects that have not yet secured low-carbon
contracts, including the projects in the CCS demonstration, and for further fuel switching away from
coal. Funding has been allocated for these projects to 2020 through the Levy Control Framework
and CCS competition, and if they are delivered, this would broadly deliver against 2020 objectives.
• Beyond 2020, developer interest remains, but policies have largely not yet been set.
– A contract has been offered for a new nuclear plant at Hinkley Point C, but no funding has been
allocated through the Levy Control Framework and the project is yet to take a final investment
decision.
– No funding has been allocated for other new projects in the 2020s and the Government has
not stated its intentions regarding new low-carbon investments in the 2020s. This creates a high
degree of uncertainty for investors who need to take decisions now in preparation for investments
that would come on line in the 2020s.
• Given this, our analysis suggests emissions intensity could be over 200 gCO2/kWh in 2030 under
current committed policy, whereas the aim should be to reduce emissions intensity to 50-100 gCO2/
kWh.
We conclude that a significant gap remains between what current policies are on track to achieve and
what should be achieved on the path to the 2050 target. The next section sets out options to begin
closing that gap.
15
60
DECC (2014) Updated Emissions Projections. Available at: www.gov.uk
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Figure 1.6. Assessment of current and planned policies: power sector
600
Lower Risk
At risk – problems
with design delivery
At risk – unfunded
Policy Gap
DECC ‘no policy’
baseline
CCC cost-effective
path to 2050 (i.e.
revised 4th Carbon
Budget trajectory)
Outturn
Emissions Intensity gCO2/kWh 500
400
300
200
100
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
0
Source: DECC (2014) Updated Emissions Projections; CCC analysis.
Table 1.2. Risk assessment of power sector policies
Policy
Comment
Lower risk policies
Renewables Obligation,
FiTs, FIDER and the first
CfD allocation round.
Policies target the right technologies and have been effective in the past. Support is
broadly matched to technology costs and funding is sufficient.
Policies with design/delivery problems
CCS demonstration
Targets the right CCS applications; continuing risks to delivery of technology and
reaching final investment decisions; £1 billion funding has been allocated.
Fuel switching
Some existing coal plant will close under the Large Combustion Plant Directive (LCPD)
& the Industrial Emissions Directive (IED), however other plant may stay open for some
time due to weakness of EU ETS and low coal prices. No new unabated coal plant due to
the Emissions Performance Standard (EPS). Capacity mechanism is an incentive for new
gas plant.
CfDs to 2020
Programme is in place and first auction has taken place, however lack of support beyond
2020 may increase uncertainty for bidders pre-2020. Support broadly appropriate.16
Unfunded policies
Nuclear – first 2 reactors at
Hinkley
Agreement on terms for proposed first contract, state aid approval granted, level of
agreed strike price appropriate, contract terms have been agreed, however contract is
not signed and funding has not yet been allocated.
Missing policies
Power sector deployment
beyond 2020
16
Moving the power sector from 200 gCO2/kWh in 2020 to 50-100 gCO2/kWh by 2030.
HIDDEN FOOTNOTE
16
CCC (2013) Next steps on Electricity Market Reform – securing the benefits of low-carbon investment. Available at: www.theccc.org.uk.
Chapter 1: Progress decarbonising the power sector 61
5.Recommendations
Enabling efficient low-carbon investment
Continuing with low-carbon auctions
As set out in Section 2, the early auction results under the Electricity Market Reform indicate success in
driving down costs. We recommend that auctions continue and proceed according to the timetable
previously set out in order to maintain the positive momentum achieved by the first auction (i.e. the next
auction round should open in late 2015).
In designing and running future auction rounds the Government should work with industry to ensure
that any lessons are learnt from the first auctions earlier this year. This could include, for example,
consideration of timings within the auction round, the length of the window from contract award to
operation and the penalties for winning bids that do not proceed.
Setting a credible carbon objective for the power sector beyond 2020
The Government’s threefold objectives for the power sector are security of supply, affordability for
consumers and decarbonisation, in line with the targets in the Climate Change Act.
Translating these high-level objectives into policy requires the Government to clarify how it aims to
balance them, given that there are important trade-offs (e.g. contracting low-carbon capacity currently
adds to costs for consumers). If this is unclear then investors are exposed to policy risk, which can deter
investment and add to costs, undermining all three objectives.
The framework to 2020 is apparent: the Government has set an objective for security of supply, has
clear plans for renewable generation and CCS and has set a limit on funding under the Levy Control
Framework consistent with delivering these. Beyond 2020, objectives and funding for decarbonisation
have not yet been set.17
This is problematic as project planning cycles in the power sector go well beyond 2020 (Figure 1.7).
Large offshore wind farms, CCS plants and nuclear plants have a project lead-time of up to 10 years or
more, with supporting investments in the supply chain stretching even further.
It is therefore an urgent priority to signal the Government’s intentions for decarbonisation in the
sector beyond 2020, such that the sector can invest with a 10-year lead time. This should involve a
clear commitment to continuing decarbonisation through a portfolio of technologies, consistent with
reaching a carbon intensity of generation of around 50-100 gCO2/kWh by 2030, which the Committee
have previously identified as being on the cost-effective path to the 2050 target.
To make a carbon objective credible (and bankable for investors and financiers) we recommend that
the Government extends the funding limit under the Levy Control Framework. Confidence in a market
beyond 2020 will drive competition and cost reduction, by supporting a strong pipeline of projects,
keeping auctions well-subscribed, incentivising innovation throughout the supply chain and reducing
the cost of capital.
A suitable extension would be to 2025, with this subsequently updated on a rolling annual basis
to continue the 10-year investment window. This should be taken forward as soon as possible and
certainly within the next year.
17
62
The Government has a published trajectory for carbon prices, but this is not bankable for investors as the actual tax rate is subject to change every year. Carbon budgets are set
to 2027, but are accounted on a net basis (see Box 1 in the Summary/Overview).
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Renewables
obligation
Contracts for
difference
Ambition
and funding
Onshore wind
Offshore wind
CCS
Nuclear
Supply chain
Innovation*
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
*Lead time for developing a new offshore wind turbine; different lead times will apply for different technologies.
2015
Supply chain &
innovation
Project lead times
Policy visibility
Figure 1.7. Lead times for low-carbon projects (development and construction) compared with policy visibility
Source: CCC estimates; BVG (2015) Approaches to cost-reduction in offshore wind. Available at: www.theccc.org.uk
Extending the Levy Control Framework
The Levy Control Framework (LCF) has been set at £7.8 billion for 2020.18 This caps the amount of
additional money that can be paid to low-carbon generators on top of the wholesale electricity
price. This was designed to limit costs to consumers while achieving the Government’s objectives for
deployment of renewable capacity, consistent with reaching at least 30% renewables penetration in
2020, as required under the EU Renewable Energy Directive.
Whilst various factors have changed, the allocated funding for 2020 still appears broadly consistent
with the objective (Box 1.2). The Government has given no indication of availability of funding for lowcarbon generation projects beyond 2020/21.
Furthermore, as we have set out in previous reports, the LCF as currently calculated is likely to overstate
the additional cost of low-carbon generation to consumers in the longer term. This is because contracts
offered to generators as Contracts for Difference that are settled relative to the electricity wholesale
price, which is expected to be lower than the cost of the alternative of unabated gas generation.19 This
reflects the so-called ‘merit order’ effect – that low-carbon generation with a low marginal cost will tend
to depress the wholesale price, reducing costs for consumers. We therefore continue to recommend
calculating the support for low-carbon generation against the alternative of providing electricity through
a new unabated gas plant facing a carbon price.
Using this approach, we estimate that the required support would be around £9 billion in 2025 to
support investment in an appropriate portfolio of low-carbon options and provide the conditions for a
competitive pipeline driving cost reduction:
• This estimate is based on the central scenarios published by DECC for 2025:
– Carbon price of £55/tCO2 as in the Government’s original published target trajectory for the
carbon price floor.
18
19
On a £2014 price index. Originally published as £7.6 billion for 2020/21 (in £2011/12).
For example, see section 3 of CCC (2013) Next steps on Electricity Market Reform.
Chapter 1: Progress decarbonising the power sector 63
– Wholesale gas price of 72 pence/therm (compared to 46 pence/therm currently). If gas prices
were to fall further (e.g. to DECC’s low case of 43 pence/therm), required funding would increase
to £11 billion to support the same level of low-carbon generation, although overall consumers’
energy bills would be lower.
• The resulting wholesale price of electricity in the Government’s central projection20 is £67/MWh
(compared to £51/MWh in 2014). This is £9/MWh lower than the long-run marginal cost of a new
unabated gas plant implied by the gas and carbon price assumptions. If support costs were
compared to this wholesale price (£67/MWh), then the required budget under the LCF would be
£10 billion.
• The bulk of the increase in funding would be to support continuing markets for less-established
technologies (i.e. offshore wind and CCS) that are required to drive innovation and cost-reduction,
as set out below. This is likely to be sufficient to drive these technologies to maturity such that they
can then compete more openly and exert cost pressure on other mature options, such as nuclear.
• Some further funding would be required to deliver planned nuclear investment and potentially
other mature options like solar and onshore wind, depending on local acceptability and ability to
win contracts in competitive auctions.
• Under our central cost assumptions, this level of funding (i.e. £9 billion judged against the costs of
the alternative of unabated gas generation, or £10 billion judged against the wholesale electricity
price) would keep the power sector on track to 50-100 gCO2/kWh in 2030.
Beyond 2025, funding requirements are expected to fall, given continuing increases in the carbon
price and as some early projects under the Renewables Obligation reach the end of their support
agreements.
Funding of high-cost technologies through the LCF should be conditional on them achieving steady
cost reductions with a view to competing with alternative options in future. A competitive market
for contracts, as under the current auctions, contributes to ensuring that the lowest cost projects are
funded.
In setting the LCF the Government will have to make assumptions over future gas and carbon prices
and how these translate to the electricity price. These should be made transparent along with the
planned response should these assumptions turn out to be incorrect. In particular, the expectation
should be that if carbon prices turn out lower than the Government assumes, or if electricity wholesale
prices are dampened by low-carbon generation, then the available funding should be increased
accordingly. These are policy-related risks that developers are not well-placed to manage.
It is worth noting that whilst lower carbon prices or lower wholesale electricity prices will tend to
increase the flow of money through low-carbon contracts they will reduce total costs faced by
consumers and improve affordability overall even if the LCF is adjusted upwards to compensate (see
our 2014 Energy Prices and Bills Report)21
.
20 DECC (2014) Updated Emissions Projections. Available at: www.gov.uk
21 CCC (2014) Energy Prices and Bills - impacts of meeting carbon budgets. Available at: www.theccc.org.uk
64
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Box 1.2. Funding under the Levy Control Framework could be sufficient to 2020 if costs are monitored closely
In 2012, the Government announced funding for low-carbon policies (including the Renewables Obligation, the Feed
in Tariff and Contracts for Difference) of up to £7.8 billion in 2020 (on a £2014 price base) with provision for a 20%
‘headroom’.
This remains sufficient to fund low-carbon generation to 2020 envisaged in our indicator trajectories, provided costs
and deployment of more expensive technologies is monitored closely:
• Gas prices have fallen. If these persist they would reduce expected wholesale electricity prices, leading to a higher
funding requirement for low-carbon generation contracted at a given price. Together these increase the 2020
funding requirement by £0.5 billion if gas prices fall to DECC’s “low” scenario (43 pence/therm).
• Offshore wind projects are running more of the year than was expected (i.e. over 40% rather than the 38%
expected). This means fewer projects may be required to meet our indicators for generation, but does not change
the cost of a given level of generation.
• Rapid uptake of solar rooftop PV, financed through FiTs, has the potential to crowd out other technologies under
the LCF, given the higher current costs of rooftop PV (e.g. up to £140/MWh for domestic installations in 2014, not
including export tariffs). Tariff reductions triggered by high installation rates could limit the impact on overall
spend, and require close monitoring.
Together these imply the funding requirement to deliver our indicators would be £7.4 billion in 2020 (in 2014 prices) if
gas prices return to DECC’s central fuel price projections, and £7.9 billion if gas prices fall further as in DECC’s low prices.
These estimates assume the Carbon Price Support remains frozen at £18/tCO2 as announced in 2014 Budget to Parliament. Available at: www.gov.uk.
Transparency over the costs of technology choices
Alongside transparency over available funding through the LCF we recommend that the Government
adopts a transparent approach to technology choices:
• If the Government chooses to constrain low-cost options (e.g. onshore wind, large scale groundmounted solar), they should also set out which alternatives will be considered to replace them. This
should include an assessment of the increase in overall costs to consumers and of any changes
required to the support arrangements to maintain overall ambition (e.g. an increase in the LCF may
be needed).
• In judging the level of subsidy paid to low-carbon generators (e.g. onshore wind), the Government
should consider the full costs of the low-carbon option and the alternative:
– This should include any system integration and security of supply costs, for example reflecting
that variable renewable capacity will generally need to be backed up by flexible capacity that
can operate on demand. We will explore these costs further as part of the analysis for our advice
on the fifth carbon budget later this year.
– The appropriate comparator is not the wholesale electricity price, but the alternative means of
providing generation. Where this is unabated gas generation, its costs should be judged across
its lifetime, assuming that it would face the full costs of its emissions.22
This implies for example, that under the Government’s central scenarios for carbon and gas prices,
onshore wind at a cost of £80/MWh is likely to be subsidy-free from the 2020s.
22 For example, in the Government’s original published trajectory for the carbon price floor, prices reach £33/tCO2 in 2020 and rise to £78/tCO2 in 2030 (in 2014 prices). Long-term carbon
appraisal values rise to over £220/tCO2 in 2050. These prices reflect a central view of expected technology costs, energy demand, and fossil fuel prices and are representative of
the value of carbon in a world that is committed to a 2°C climate objective.
Chapter 1: Progress decarbonising the power sector 65
Developing options and supporting innovation
Delivering the large amount of low-carbon electricity needed to meet the 2050 target is likely to entail
deployment of technologies that are currently high cost relative to established options such as nuclear
and onshore wind. This reflects that established options face risks and limits to their potential roll-out –
for example relating to site restrictions for onshore wind and new nuclear.
An effective strategy needs to ensure that emerging technologies are developed. The focus should be
on technologies with scope for costs to fall to a level where they can put cost pressure on established
technologies and can provide a large amount of low-carbon generation when it is needed. To ensure
best value for consumers, the near-term goal should be development of the option, rather than
deployment per se – although as we set out below, in some cases deployment has an important role in
driving innovation and cost reduction.
For this report we commissioned detailed analyses to consider what is required to drive cost
reduction beyond 2020 for two key emerging technologies – offshore wind and CCS (Box 1.3). These
technologies are currently more expensive than other alternatives but have potential to deploy at large
scale, relatively low delivery risks and scope for costs to fall.23
There are of course other emerging options, which are currently high cost but could have a significant
future role and would benefit from innovation support. In the power sector, these include rooftop
and distributed solar, where there is potential for UK-based cost reduction in installation but where
the panel technology is likely to develop globally (supported by UK research), and wave and tidal
technologies, for which the UK has a strong resource and which currently requires early-stage
innovation and demonstration support. Innovation will also be important in supporting areas such as
energy storage and smart grids.
Given their high initial costs, emerging technologies are likely to be dependent on Government
support. A common theme from our new work is that Government must provide clarity about the
conditions under which support will be available while setting stretching expectations for technology
development to enable innovation and cost reduction.
For both offshore wind and CCS, delivering a programme cost-effectively and that maximises any
potential UK industry benefit requires confidence of a market beyond 2020. This will be unlikely to occur if
these technologies are required to compete openly with other low-carbon options in the early 2020s.
Offshore wind
Our updated assessment (Box 1.3) finds that costs for offshore wind appear to be falling in line with
industry goals and could continue to fall through the 2020s under a supportive policy environment.
This would enable offshore wind to provide an additional option for low-carbon generation at costs
that are comparable to those of nuclear and onshore wind. That would be a major step towards
meeting the 2050 target in the Climate Change Act given the importance of providing low-cost, lowcarbon electricity and the large potential offshore wind resource (i.e. over 400 TWh per year, more than
total UK electricity demand in 2014).
The most important enabler for these cost reductions is providing confidence that there will be a
continuing market for deployment provided costs continue to fall:
• A sufficient scale of market is required to drive private sector investment in innovation (e.g. to create
bigger turbines), to support a competitive project pipeline and supply chain, and to encourage a
falling cost of capital through mature financial sector involvement.
23 See, for example, CCC (2011) The Renewable Energy Review. Available at: www.theccc.org.uk
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• An EU market size of around 3-4 GW per annum would be enough to support three or four major
players in the turbine market and provide sufficient potential return to incentivise the very large
investment required to develop and bring the next generation of turbines to market.
• A UK market of around 1-2 GW per annum through the 2020s would be consistent with an EU
market of that size and would support multiple developers in the UK, ensuring that auctions remain
competitive.
The cost of a 1-2 GW annual UK programme in the 2020s implies annual support of around £0.8 billion
in 2025. This is in addition to continuing support for pre-2020 projects, which falls from £3 billion in
2020 to around £2.5 billion in 2025 in DECC’s central scenario for wholesale electricity prices. Overall
LCF funding should be allocated at a level that is consistent with this scenario for offshore wind.
In allocating funding, it should be made clear that offshore wind is not expected to compete with
established low-carbon technologies in the early 2020s provided projects continue to demonstrate
cost reduction. A larger market could be secured in the event of lower prices than alternative
technologies, providing further incentives to reduce costs.
Deployment should be complemented by support for targeted R&D, including in ways that de-risk
and encourage collaboration within the industry and look ahead to new needs (e.g. to novel concepts
such as floating turbines). A clear conclusion of our new work however is that on its own, targeted R&D
support cannot be an effective substitute for confidence in an ongoing market.
Chapter 1: Progress decarbonising the power sector 67
Box 1.3. Updated assessments of the potential and drivers of cost reduction for offshore wind and CCS
Offshore wind
We commissioned BVG Associates (BVGA) to extend the evidence base on cost reduction to 2030, and assess the
potential role of the UK Government in unlocking any further cost reductions.1 Their findings were:
• Costs are falling broadly on track to £100/MWh by 2020.2 This is a result of earlier than anticipated uptake of
larger turbines (i.e. 6MW and 8MW), which have offset delays in other areas (e.g. support structure manufacture).
The results of the first low-carbon auctions appear to confirm these reductions.3
• BVGA identified potential for further cost reductions in the 2020s to get below £100/MWh. Opportunities
include technological innovations (e.g. larger and more reliable turbines rated at 10 MW), improved competition
and management of risk in the supply chain, and falling cost of capital as the finance community gains confidence
and experience in offshore wind.
• The international market is important in driving investment, within which the UK is expected to be a
major player in the 2020s. BVGA’s analysis focused on the role of the UK within the North-Western European
market, which currently accounts for almost 90% of global installed capacity and will be of particular importance in
the 2020s. While disruptive innovations may occur elsewhere (e.g. floating turbines), their progress is uncertain and
they are unlikely to play a significant role in cost of energy reduction on UK projects in the period to 2030.
• A strong European market will support more cost reduction, with a critical mass of an average annual
deployment rate of around 3-4GW a year required to support competition and cost-reduction. For
example, this would support three to four players in the turbine market that are large enough to invest in major
innovation programmes.
• A UK market with annual average deployment rates in the range 1-2 GW in the 2020s is consistent
with a balanced approach to cost-reduction. Although the UK market is insufficient to drive unilateral costreduction on its own, it is an important player internationally. A reduced UK market size could affect confidence
internationally, potentially resulting in other markets reducing their ambitions. A 1-2 GW UK market would also
support multiple project phases each year, allowing competitive CfD auctions and reducing programme risks for
individual developers.
• To unlock these opportunities, confidence in a future market is the most important driver. This will enable
large equipment suppliers to make the required investments in developing the next generation of technology and
infrastructure. It will also build industry interest and expertise throughout the supply chain, including in finance,
which are needed to integrate new technologies effectively. As a result, a programme of offshore wind with
confidence over a future market is likely to be cheaper than a programme without visibility.
• Confidence in market scale can be supplemented, but not replaced by, targeted R&D support. Pure R&D
support is not likely to deliver larger turbines, lower finance costs or reduced project management costs. However,
it can reduce risks in the commercialisation of some components and prepare for future challenges (e.g. floating
platforms).
• Other strategic actions may also enable cost reductions. For example, continued knowledge sharing within
the industry, sharing of transmission infrastructure across multiple projects and taking a more active public role in
site development
Carbon Capture and Storage (CCS)
We commissioned Pöyry and Element Energy to extend previous studies of cost reduction in CCS4, suggesting that there
remains potential for CCS to compete with other low-carbon electricity generation technologies during the 2020s:
• There is potential for individual CCS power projects to have lifetime generation costs below £100/MWh
by the mid-2020s. While large cost reductions are identifiable, absolute cost figures remain particularly uncertain
given the early stage of development and importance of future market prices for fossil fuels.
• CO2 transport and storage infrastructure offers large economies of scale and forms the largest single
opportunity for cost reduction. It is vital therefore that initial projects invest in over-sized infrastructure, but early
projects will be expensive per unit of electricity generated as a result. Further opportunities include cost of capital
reductions, which will be primarily supported by UK deployment, and innovation in capture technology, which is
likely to follow mainly from global roll-out.
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Box 1.3. Updated assessments of the potential and drivers of cost reduction for offshore wind and CCS
• A minimum programme size of 4 to 7 GW by 2030 could unlock the majority of cost reductions. A 4 GW
programme may be sufficient if the focus is on a single technology and fuel (e.g. post combustion gas), while a
7 GW programme would allow risk to be spread over projects covering both coal and gas, potentially with different
capture technologies. Higher deployment may be appropriate if CCS costs turn out lower than those of other lowcarbon technology options.
• There should be no significant gap prior to the second phase of projects, to avoid a hiatus in the industry
and a potential loss of momentum and skills. Government should aim for a steady roll-out and scale-up of
projects to maintain a knowledge base while also allowing time for learning and risk reduction from previous
generations of CCS to feed-through into future projects.
Advisory group findings
Given the inevitable judgements involved in these assessments we also convened an advisory group of independent
industry experts, chaired by Dr. Robert Gross of Imperial College.5 The group was asked to review the consultancy
studies and give recommendations for required Government actions. This group supported the key conclusions of the
consultancy studies and highlighted important aspects for the Government’s approach:
• A modest and stable UK market is essential to cost reduction. Cost reduction and commercialisation for both
offshore wind and CCS will only be possible if there is enough market opportunity to create a ‘critical mass’ for
developers, the supply chain, installers and the investment community.
• The Government needs to provide a clear signal of intent early in this Parliament. A typical offshore wind
farm is likely to require around five years and £50 million of site development work prior to final investment
decision, with a further one to two years for construction. A typical full chain CCS project might take nine years to
deliver and in the case of CO2 storage the pre-FID investment could reach £100 million.
• Public R&D funding is unlikely to be as effective as a market-led approach. The scale of costs and skills
involved in developing, for example, a new generation of offshore wind turbines, and other related infrastructure,
is significant. Existing manufacturers are best placed to deliver this and will only invest if they see a strong
commercial opportunity. Public R&D funding, if pursued as a substitute to a stable market, would introduce new
risks to the supply chain and reduce the other benefits of competition.
• Policy can create the conditions for cost reduction but cannot assure it. The consultancy studies are
contingent on assumptions regarding technology development and the impact of policy. It will be important
for the Government to signal clearly that ongoing levels of support will be contingent on industries realising
anticipated levels of cost reduction.
• Policy has important qualitative and strategic dimensions. For example, in CCS, developing a cluster of CCS
power or industrial projects, which is unlikely to occur in the absence of strategic oversight. In offshore wind,
carefully determining the points in the development process where competitive tendering processes are most
effective, and whether there is a greater role for a strategic approach to site development.
1
BVG Associates (2015) Approaches to cost-reduction in offshore wind. Available at: www.theccc.org.uk
2
T he £100/MWh goal was set out in The Crown Estate (2012) Offshore Wind Cost Reduction Task Force Report, available at: www.gov.uk. Latest cost estimates were
published earlier this year by the Offshore Wind Programme Board: Deloitte (2015) Cost Reduction Monitoring Framework: Quantitative assessment report and DNV GL
(2015) Cost Reduction Monitoring Framework: Qualitative assessment report. Both are available online at ore.catapult.org.uk. Costs are for Final Investment Decision i.e.
with first generation in 2022/23.
3
The two projects that secured CfDs had strike prices of approximately £120/MWh and £114/MWh and will reach FID this year (or early 2016). Allowing for the fact that
CfD contracts are shorter than project lifetimes, these strike prices are broadly equivalent to a cost of energy of £110/MWh and £105/MWh respectively (2012 values).
4
Potential CCS Cost Reduction Mechanisms (Pöyry 2015). Available at www.theccc.org.uk.
5
ross, R. (2015) Approaches to cost reduction in carbon capture and storage and offshore wind. Available at: www.theccc.gov.uk. Other group members were: the Energy
G
Technologies Institute, the Crown Estate, Climate Change Capital and DECC’s Office of CCS Expert Chair.
Chapter 1: Progress decarbonising the power sector 69
Carbon Capture and Storage (CCS)
As set out in section 2, CCS is a vitally important part of the low-cost path to 2050. Although initial
projects are expensive, they are required to establish whether CCS could offer low-cost abatement
(e.g. mid-merit power generation) and whether there is future potential for emissions reduction in
sectors with limited alternatives (e.g. parts of industry).
Our updated assessment (Box 1.3) confirms earlier findings from the Cost Reduction Task Force that
CCS may be able to compete on cost with other low-carbon options by the late 2020s. This would be
particularly likely if fossil fuel prices turn out to be at the low end of expectations or if flexible lowcarbon generation operating for only part of the year is required.
The key opportunity for delivering cost reduction is through economies of scale delivered by shared
infrastructure for transporting and storing CO2. This implies a minimum level of roll-out will be required
in the UK which, if signalled in advance, can also support a competitive pool of projects and increase
interest from the financial community.
If based in clusters around the two planned projects at White Rose and Peterhead, a programme of 4-7
GW by 2030 could unlock economies of scale and deliver cost reduction for CCS:
• The projects planned at White Rose and Peterhead are being designed with oversized infrastructure
and are located in areas where other projects can connect (see section 2). These projects need to
deliver and stick to the timelines that have been set out (i.e. final investment decisions should be
taken by the end of this year).
• A programme of 4-7 GW by 2030, alongside industrial installations (see Chapter 3), would unlock the
bulk of the economies of scale for transport and storage for two clusters developed around these
two projects.
• A 4-7 GW programme would also allow a phased scale-up in plant size in the UK for one or two
fuels and capture technologies. This would allow lessons to be learnt between projects while
maintaining sufficient momentum to retain skills and expertise in the UK, to keep a pool of potential
projects under development and to interest the financial community and therefore reduce costs of
capital.
• Going beyond 4-7 GW would deliver limited further clear benefits in cost reduction but would be
appropriate if CCS plants can deliver low-carbon power more cheaply than the alternatives.
This size of program implies at least two further capture plants need to be signed before the two
projects are operational. As in the current competition, a technology neutral approach is appropriate
given uncertainty over which technology will be most successful. International experience will mean
points of comparison are available to signal a direction change if needed.
We therefore recommend that the Government:
• Aims to deliver 4-7 GW of CCS capacity by 2030, alongside CCS applications in industry, with
potential to go beyond this if CCS can provide low-carbon electricity more cheaply than the
alternatives.
• Provides sufficient funding for this programme under the Levy Control Framework. We estimate
that an increase in annual support of around £0.8 billion in 2025 would be sufficient to fund 7 GW
of CCS, allowing two fuels or technologies to be taken forward in the UK. Lower funding would
be required for a 4 GW programme, but this would reduce the diversity of fuels and technologies
that would be proven in the UK and could limit the number of projects prepared to compete for
contracts.
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• Ensures that the first two plants at White Rose and Peterhead deliver as planned.
• Signs contracts for at least two follow-on projects this Parliament, to connect into clusters based
around the planned projects.
• Develops a strategic approach to CO2 transport and storage infrastructure. This could involve
working with industry to develop an effective business model for infrastructure sharing or could
involve a more regulatory approach to infrastructure build-out and pricing. This should include
consideration of the potential for Enhanced Oil Recovery.
• Works with industry and international partners to ensure knowledge sharing and to remove
barriers. This should include resolving issues around storage liabilities, fuel price indexing in
contracts and additional storage appraisal.
Success across these areas would be a major step towards the 2050 target, and more broadly towards
global efforts to tackle climate change, given the vital importance of CCS in meeting carbon targets in
the UK and internationally.
Chapter 1: Progress decarbonising the power sector 71
Chapter 2: Progress reducing
emissions from buildings
1. Buildings emissions trends
and drivers
2. The Committee’s approach to
tracking progress in buildings
3. Low-carbon heat
4. Residential buildings
5. Non-residential buildings
6. Forward look
7. Summary
Key messages and recommendations
In this chapter, we examine emissions from homes, commercial and public buildings, which
account for 17% of the UK’s direct GHG emissions. These emissions are primarily due to fossil fuel
use in space heating. Indirectly, buildings also account for two-thirds of power sector emissions,
mainly due to electricity demand from lighting and appliances. We focus on progress towards heat
decarbonisation and improving energy efficiency, which are key areas for emission abatement in
buildings.
Overall performance:
• Direct buildings emissions fell by 15% in 2014, mainly as a result of higher temperatures which
reduced heating demand. For energy efficiency, we are currently meeting our emissions
trajectory (i.e. the cost-effective path to achieve carbon budgets, although not when adjusting
emissions for temperature. Furthermore, the delivery of key measures has slowed down since
2012, putting required further emission reductions at risk. Very little progress has been made in
heat decarbonisation.
Low-carbon heat:
• Decarbonising space and water heating is one of the biggest challenges for carbon budgets.
In 2013, low-carbon heat accounted for only 1.6% of buildings heat demand. Low-carbon heat
policy constitutes most of the gap between what current policies are expected to deliver and
what our cost-effective trajectory for meeting the fourth carbon budget requires.
1
Energy efficiency
• In recent years, emissions from homes have reduced due to improved energy performance
from higher levels of insulation, as well as more efficient appliances and lighting. However,
recent policy changes have resulted in a slow-down in the rate of installation of insulation
measures in homes. This means that cost-effective emissions savings are being missed and
there is a detrimental impact on the ability to meet targets to alleviate fuel poverty. Nonresidential buildings emissions have stayed flat, with little evidence of any energy efficiency
improvement.
Our key recommendations are:
• Low-carbon heat: Develop an action plan to address the significant shortfall in low-carbon
heat. Short term, this should commit to extend the Renewable Heat Incentive to 2020, or until a
suitable replacement is found; long term it should link support for low-carbon heat with energy
efficiency, support for heat networks and wider decisions about infrastructure for heat.
• Energy efficiency: Set out the future of the Energy Company Obligation beyond 2017, ensuring
it delivers energy efficiency while also meeting fuel poverty targets.
• Zero Carbon Homes: Implement zero carbon standards without further weakening and ensure
incentives are in place to encourage low-carbon heat sources.
• Commercial sector: Simplify and rationalise existing policies for energy efficiency improvement,
with a view to strengthening incentives, by the end of 2016.
Chapter 2: Progress reducing emissions from buildings 73
We set out the analysis that underpins these conclusions in the following sections:
1. Buildings emissions trends and drivers
2. The Committee’s approach to tracking progress in buildings
3. Low-carbon heat
4. Residential buildings
5. Non-residential buildings
6. Forward look
7. Summary
Our Adaptation Progress Report also includes chapters on the built environment, and healthy and
resilient communities. These examine several topics that overlap with issues covered in this chapter. For
example, reducing water demand will also have a positive impact in terms of emissions due to reduced
energy consumption for water heating. Introducing passive cooling measures in new and existing
homes as the climate warms will keep demand for energy-intensive air conditioning at a minimum.
Passive cooling should be implemented alongside measures to increase the energy efficiency of the
residential building stock, to avoid the latter increasing overheating risk. It is therefore important for
the UK and devolved governments to manage climate change mitigation and adaption policies for
buildings in an integrated way. A key measure for achieving this is the Building Regulations for both
new build and existing homes. For example, the 2016 Zero Carbon Homes standard should seek to
both minimise emissions and ensure passive cooling.
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
1.
Buildings emissions trends and drivers
Direct buildings emissions fell 15% in 2014 to 84 MtCO2e. They accounted for 17% of all UK GHG
emissions. This fall was mostly due to the fact that 2014 was a warmer than average year. Temperatureadjusted emissions fell just 2% from the previous year, to 94 MtCO2e. Electricity demand from buildings
fell 5% in 2014, to 201 TWh. This is associated with 81 MtCO2 of power sector emissions, or 67% of the
total power sector emissions.1 Direct building emissions are split between homes (74%), commercial
buildings (16%) and the public sector (10%) (Figure 2.1).
Figure 2.1. GHG emissions from buildings in the context of total UK emissions (2014)
Total emissions
520 MtCO2e
Residential direct CO2
12%
Residential non-CO2
1%
Public direct CO2
2%
Public non-CO2
0%
Other sectors
66%
Commercial direct CO2
3%
Commercial non-CO2
0%
Residential share of CO2
from grid electricity
9%
Public share of CO2
from grid electricity
2%
Commercial share of CO2
from grid electricity
6%
Source: NAEI (2015), DECC (2015) Energy Trends, March 2015, DECC (2014) DUKES; CCC calculations.
Note: 2014 emission estimates are provisional. Commerical sector and non-CO2 are based on CCC estimates. The emissions from grid electricity are mainly power sector
emissions, with a small contribution of 8 Mt from other sectors (mainly industry).
Emissions from buildings were more than 5MtCO2 below our trajectory in 2014 (Table 2.1 and Figure
2.2). However, on a temperature-adjusted basis, they were 4MtCO2 above the trajectory. It is also
important to note that the trajectory does not include abatement from low-carbon heat technologies.2
A lack of progress in public and commercial buildings is being masked by outperformance in homes.
The slow-down in home insulation since 2012 (Section 3) suggests that some of the required further
emission reductions are at risk if this trend continues.
• Residential buildings: The drop in direct emissions in 2014 reflects a decline in fossil fuel
consumption for space heating because of higher temperatures. The decline in electricity
consumption is partially due to higher temperatures (with 7% of buildings heated by electricity)
and partially due to continuing improvements in electrical appliance and lighting efficiency.
For example, energy saving light bulbs accounted for just over 50% of the lighting stock in 2013
compared to 9% in 2007.
• Commercial buildings: Commercial buildings are the only element of the building stock which
have not achieved a reduction in direct emissions since 2007. In 2014, there was less impact on
energy use from higher temperatures than in homes.3 There was better progress in reducing
1
2
3
It is also associated with a further 8 MtCO2 of emissions associated with electricity consumed from the grid originally produced through autogeneration in industry and refineries.
Our trajectory currently only includes abatement potential from energy efficiency. We will include heat when we advise on the Fifth Carbon Budget later this year.
Consumption of heat in non-residential buildings is typically less sensitive to external temperatures. In 2014, DECC and CCC estimate that emissions from non-domestic buildings
Chapter 2: Progress reducing emissions from buildings 75
electricity consumption, which fell by 5% in 2014. It is not possible to determine whether these
changes are due to fuel-switching from electricity to gas due to lower gas prices. However,
commercial energy intensity has remained flat over the carbon budgets period (Figure 2.5), which
underlines the overall lack of progress in the sector.
• Public sector: On the surface, public sector buildings are making better progress than commercial
sector buildings. However, one of the drivers could be downsizing of the public sector estate and
falling public sector employment, which is currently at its lowest in 15 years. There is some evidence
that this is being combined with some energy efficiency improvement, but progress is patchy.
Electricity demand remained flat in public buildings.
Figure 2.2. All buildings direct emissions – historic vs trajectory
120
Historical emissions
Indicator trajectory
2007 to 2014
actual emissions
2007 to 2014
actual emissions
(temperature adjusted)
100
MtCO2
80
60
40
20
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0
Source: NAEI (2015), DECC (2015), Energy Trends, March 2015, DECC (2014) DUKES; CCC calculations.
Note: 2014 emission estimates are provisional. Temperature adjustment is based on CCC calculations.
Table 2.1. Buildings emission trends – summary
Direct emissions
(MtCO2) 2014
Temperature-adjusted
change
% change from 2007
Actual
Temperatureadjusted
% change
2013-2014
% average
change
2009-2013
CCC indicator
trajectory
Outturn
Residential
62
71
-2%
-1%
-3%
-19%
Nonresidential
22
23
-4%
1%
-14%
11%
of which
commercial
14
14
-2%
2%
-
-
of which
public
8
9
-7%
0%
-
-
All buildings
84
94
-2%
-1%
-5%
-13%
Source: CCC analysis based on National GHG Inventory.
would have been 4% higher under average temperature conditions, compared to 9% higher in the case of homes.
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
2.
The Committee’s approach to tracking progress in buildings
We track progress in the buildings sector against our detailed indicator framework, which we set
out in our first Progress Report in 2009 and revised in our 2014 Progress Report. Apart from headline
indicators on direct CO2 emissions and electricity consumption, our buildings sector indicators cover
low-carbon heat deployment, the installation of energy efficiency measures (insulation, boilers, LED
lights and domestic appliances), and policies to deliver abatement.
• Low-carbon heat: We monitor overall deployment of low-carbon heat (as a percentage of heat
demand), as well as delivery of installations under the main policy, the Renewable Heat Incentive.
We examine low-carbon heat deployment in both the residential and non-residential sector in
Section 3.
• Energy efficiency: We monitor actual installation numbers for key insulation measures (loft, cavity
and solid wall insulation) and new boilers in homes, as well as the stock penetration for LED lighting
and the most efficient wet and cold appliances (Section 4). While data for the residential sector
is good, similar data is not available for the non-residential sector. We therefore only monitor the
energy intensity of commercial and public sector buildings (measured as energy consumption per
unit of output, Section 5).
• Policies: We monitor progress in implementing policies that drive low-carbon heat uptake and
energy efficiency in homes, commercial and public sector buildings. This is a very complex policy
landscape. Some policies (Renewable Heat Incentive, Building Regulations, appliance standards) apply
to all buildings, while others cover only the residential (e.g. the Energy Company Obligation) or nonresidential sector (e.g. CRC Energy Efficiency Scheme). Some policies are also devolved or partially
devolved. Table 2.2 sets out the main policies. This list is not exhaustive – we refer to other supporting
policies throughout the chapter. We examine low-carbon heat policy for all buildings in Section 3 and
other policies separately for homes (Section 4) and non-residential buildings (Section 5).
Taken together, our indicators, if met, would put the UK on the path to a buildings sector that is much
more energy efficient by 2030, and in which low-carbon heat plays an increasingly important role.
Table 2.2. Energy efficiency and emission reduction policies for buildings
Policy name
Sector
Description
Energy Company
Obligation (ECO)
Residential
GB-wide obligation on energy suppliers to improve energy efficiency,
reduce fuel poverty and save carbon in homes, legislated to run 2013-2017.
Three sub-obligations: the Carbon Emissions Reduction Obligation (CERO),
the Carbon Savings Community Obligation (CSCO) and the Home Heating
Cost Reduction Obligation (HHCRO). Average annual ECO delivery costs
by energy suppliers are around £0.8 billion, with costs recovered through
customers’ energy bills.
Green Deal
Residential
Financial mechanism for energy measures in able-to-pay households
recommended in a Green Deal assessment. No upfront payment for
measures as the costs are recovered over time through the electricity
bill. Fixed interest rate finance through the Green Deal Finance Company.
Green Deal assessments are available to businesses but no special finance
is available.
Devolved energy
efficiency schemes
Residential
Scotland and Wales have their own energy efficiency schemes (generally
fuel poverty focused) to supplement the ECO. Northern Ireland has a
supplier obligation scheme similar to the ECO, as well as an additional
boiler replacement and fuel poor energy efficiency scheme (Chapter 7).
Chapter 2: Progress reducing emissions from buildings 77
1
Green Deal Home
Improvement Fund
Residential
Provides up to £1,250 subsidy for installing two out of a list of 11 energy
efficiency measures. Previous phases have also subsidised solid wall
insulation. England and Wales only.
Table 2.2. Energy efficiency and emission reduction policies for buildings
Policy name
Sector
Description
Renewable Heat
Incentive (RHI)
All
Subsidy scheme available to businesses and public bodies (since 2011)
and householders (since 2014). It pays a fixed tariff per unit of renewable
heat produced for a range of technologies including heat pumps, biomass
boilers and solar thermal.
Building Regulations
part L
All
Sets out the energy efficiency requirements (the conservation of fuel
and power) for new buildings and refurbishment to existing buildings.
Devolved policy, called Part F in Northern Ireland.
Zero Carbon Buildings
All
From 2016, new homes built in England will have to be built to a zero
carbon standard. This will require a high level of energy efficiency and
will allow some offsetting of carbon emissions through off-site ‘allowable
solutions’. Public buildings will follow in 2018 and commercial ones in 2020.
Scotland, Wales and Northern Ireland are planning similar standards.
Energy Performance
Certificates (EPCs)
All
EPCs are required under the EU Energy Performance of Buildings Directive
whenever a building is built, sold or leased and provide an energy rating
based on the performance of the building itself and its services (such as
heating and lighting).
Display Energy
Certificates (DECs)
Public
Required for public buildings with a floor space over 500 m2. This certificate
shows the actual energy usage of a building and must be produced
annually. Commercial buildings can adopt DECs on a voluntary basis.
Private-rented sector
regulations
All
Legislation passed in early 2015 requires all properties in the private-rented
sector in England and Wales to meet a minimum EPC standard of ‘E’ from
2018 when rented/leased.
Real time displays/Smart
meters
All
Energy suppliers have an obligation to deliver smart meters (which provide
near real time information on energy use) to all households and businesses
by 2020.
EU Products Policy
All
Policy that regulates energy-related products in the EU. Includes minimum
energy performance standards for appliances under the Ecodesign
Directive and the Energy Labelling Directive.
CRC Energy Efficiency
Scheme (previously
the Carbon Reduction
Commitment)
Nonresidential
Mandatory carbon reduction and energy efficiency scheme for large
non-energy intensive public and private organisations. It requires them to
report on electricity and gas consumption and pay a carbon tax. It covers
emissions not already covered by the EU Emissions Trading Scheme and
Climate Change Agreements.
Climate Change Levy
(CCL)
Nonresidential
Tax on energy consumption which applies to all non-domestic consumers.
In 2014/2015, the rates were 0.541 p/kWh for electricity and 0.188 p/kWh
for gas.
Energy Savings
Opportunities Scheme
(ESOS)
Nonresidential
Compulsory Energy Audits required under the EU Energy Efficiency
directive for all ‘large’ enterprises (over 250 employees and/or above
turnover and balance sheet thresholds). The first year of audits is 2015, to
be repeated every three years.
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3.
Low-carbon heat
Low-carbon space and water heating is critical to cost-effective decarbonisation, but has not received
the policy attention that its importance merits. The following section reviews the lack of progress
to date in this area and the implications for meeting carbon budgets. An urgent policy response is
required.
(a) Progress against indicators
Low-carbon heat made up 1.6% of all heat used in buildings in 2014, or 2.1% if agricultural buildings are
included (Figure 2.3).
On this basis, the Government ambition of 12% of heat from low-carbon sources by 2020 no longer
looks achievable:
• Government’s 12% ambition for 2020 has always looked difficult to achieve given the low starting
base, particularly in the second half of the decade where uptake was set to increase from 4% to 12%
within four years.
• This trajectory was informed by projections of uptake under the RHI, which have not been realised
in initial years of the scheme. There is currently a mismatch between the ambition for the RHI and
its role in driving low-carbon heat. In 2013, it supported only 0.6 TWh or 3% of the total low-carbon
heat in the economy:
1
– Industrial and domestic biomass makes up the largest part of low-carbon heat, at 5.9 and 5.2
TWh in 2013 respectively. In both cases, over 80% of the uptake precedes the RHI.
– Of the additional low-carbon heat which has come online since, only a portion has been
supported by the RHI. It is likely that for larger schemes, issues around the bankability of the
RHI are one of the main issues.4 The reasons for continued uptake of renewables without RHI
subsidy in buildings are less clear, but may be due to lack of awareness of the scheme or delays
in accreditation.
• The scale of the challenge is reinforced through comparison with progress in other EU countries. For
example, although low-carbon heat is already delivering almost 10% of heat demand, the German
Government has responded to concerns around the feasibility of meeting its 14% renewable heat
target by 20205 with a new package of measures to drive uptake. The fact that it felt the need to
take remedial action to mitigate the risk of achieving a four point increment in five years highlights
the likely difficulty for the UK in achieving more than twice that ambition in the same period.
Our cost-effective trajectory for meeting the fourth carbon budget includes 24% of heat from lowcarbon sources in 2025 across the economy. Falling behind on heat decarbonisation implies higher
costs in other sectors for achieving the same level of effort.
4 For projects with long-lead in times, policy uncertainty around the future of the RHI, along with the uncertainty linked to the impact of any future tariff degression mean that
RHI revenues may not be accepted by investors as part of the financial case. This issue could be remedied through the use of tariff guarantees. This solution has been considered
by DECC in a paper Non-Domestic Renewable Heat Incentive Tariff Guarantees (DECC, 2014) which is available online at: https://www.gov.uk/government/uploads/system/uploads/
attachment_data/file/384316/RHI_Tariff_Guarantees_Position_Paper_-_9th_December_2014.pdf
5 Measures to address this include incentives totalling 300 million euros, bonuses for small and mid-size companies that invest in renewable sources of heating, as well as grants
and loans for bigger companies.
Chapter 2: Progress reducing emissions from buildings 79
Figure 2.3. Uptake of low-carbon heat in buildings
12
Low-carbon heat
indicator
Uptake (buildings)
Buildings including
agricultural buildings
% uptake of low-carbon heat
10
8
6
4
2
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: DECC (2014) Digest of UK Energy Statistics 2014; DECC (2014) Energy Consumption in the UK; CCC calculations.
Uptake of heat pumps in homes continues to be slow, with 15,000 delivered in 2014 under the RHI, and
a cumulative stock of around 120,000.6 If sales remain at current levels, the cumulative total in 2020 will
be around 250,000 – less than half our indicator of 600,000 on the cost-effective path.
(b) Policy
The following section reviews progress in building up low-carbon heat supply. Both the domestic and
non-domestic RHI are also assessed in Sections 4 and 5, alongside other demand-side policies.
Building-scale technologies overview
Retrofit
The Renewable Heat Incentive (RHI) is the main mechanism in place for delivering low-carbon heat to
2020. It is a set of tariffs for domestic and non-domestic heating technologies. The tariffs pay a fixed
price per unit of renewable heat generated.7 They are designed to cover the additional costs relative to
standard heating technologies.
The delivery of building-scale technologies under the RHI has picked up pace over the past year with
both schemes forecast to be over budget for this year. However, there remain significant challenges
to increasing heat pump uptake in non-residential buildings and continuing to build up the volume
under the domestic RHI.
Recent analysis by the Energy Technologies Institute (ETI) has estimated a significant increase in
abatement costs to 2050 of around 30%, if electric heating solutions are not deployed. This reinforces
our assessment of the need to support the deployment of heat pumps in buildings.
The non-domestic RHI has successfully driven the uptake of bioenergy, but is failing as a mechanism
for driving heat pump uptake.
• To date, 99% of the 3.0 TWh of heat generated8 under the non-domestic scheme has been
bioenergy – mainly small (45%) and medium-scale (34%) biomass boilers.
6 Calculated based on figures in Nowak, T., Jaganjacova, S. & Westring, P. (2014) European Heat Pump Market and Statistics Report 2014.
7 This is based on metered heat output in the case of the non-domestic scheme and on deemed heat for the domestic scheme (i.e. estimated).
8 DECC (2015) RHI statistics release, April 2015. If including equivalent heat generated by biomethane injected in to the gas grid, this would bring the total up to 3.2 TWh of heat
generated to date.
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• Discussions with industry stakeholders suggest that the returns offered by the current biomass
tariffs may be higher than for heat pumps. This should regulate itself over time as the tariffs are
adjusted down through the tariff degression mechanism, although this will not necessarily lead to
the uptake of more heat pumps.
Targeted actions are required to address this issue and should be a focus for the new Government.
Uptake in the first year of the domestic RHI has seen a more balanced mix of technologies, but
significant year-on-year growth in heat pump sales is required to meet the carbon budgets.
• Under the domestic RHI there were 19,000 heat pump accreditations out of a total of 33,000
accredited renewable heat installations – a volume of heat pump sales broadly in line with the
average 18,000 heat pump sales observed between 2010 and 2013.9
• Even if the market were to grow 30% year-on-year to 2030, the cumulative number of heat
pumps delivered would be around 3.2 million, falling short of our assessment of the cost-effective
trajectory of 4 million heat pumps in homes by 2030.
Meeting carbon budgets will require maintaining incentives in place in the near-term for all buildings,
combined with a targeted set of measures to address areas of shortfall. Two of the main non-financial
barriers affecting uptake are low public awareness of the subsidies and the consumer risk premium
attached to lesser known low-carbon technologies.10 Addressing these barriers can help boost uptake
and improve the overall scheme cost-effectiveness.
• Awareness of the support schemes is very low at 21% for the non-domestic scheme11 and most
likely lower for the domestic RHI.12
• Current RHI tariffs make allowance for additional costs,13 designed to give a return of 16% to
consumers and 12% to businesses. These are partly to overcome non-financial barriers to uptake,
including lower confidence in new technologies. These barriers could be addressed through
continued confidence building, including further training for installers, consumer training and
follow-up support.
The priority for the new Government should be to produce a detailed delivery plan that sets out the
role of heat in meeting the fourth carbon budget.
• In our 2014 Progress Report, we set out the need to commit funding to 2020 and to commit to the
continued existence of the RHI until an adequate replacement is in place.
– The non-domestic RHI is currently the main mechanism for delivering low-carbon heat uptake to
2020, due to the relative cost-effectiveness of large-scale renewable heat projects and lower risk
premiums than for householders.
– The domestic RHI scheme is intended to make a smaller contribution towards the 2020
renewables target and 12% low-carbon heat ambition (only around 10-30% of the total buildings
uptake).14 It is essential to build up supply chains to allow the sector to deliver at volume through
the 2020s.
9 Nowak, T., Jaganjacova, S. & Westring, P. (2014) European Heat Pump Market and Statistics Report 2014.
10 Others include a poorly insulated housing stock which is less suitable for heat pump retrofit, hassle costs and the disamenity value attached to any loss of space.
11 DECC (2014) Evaluation of the Renewable Heat Incentive. Interim report: The non-domestic scheme.
12 Latest available figures from the DECC Wave Survey found that only 5% of people surveyed had heard of the RHI – see DECC (2014) Green Deal Household Tracker survey. Research
on awareness of the Green Deal and the Domestic Renewable Heat Incentive Wave 4 report, June 2014.
13 This includes the cost of capital, hassle and a risk premium attached to new technology.
14 Range based on original 2010 RHI projected uptake of 51 TWh of low-carbon heat in buildings by 2020, on a heat output basis. The bottom of the range reflects the DECC (2013)
Domestic RHI Impact Assessment; the top of the range is taken from CCC (2010) The Fourth Carbon Budget.
Chapter 2: Progress reducing emissions from buildings 81
1
– Financial incentives are currently required to drive uptake of low-carbon heat. Without incentives
in place, the UK will struggle to meet the carbon budgets without incurring significant
other costs.
– There is a need for an immediate focus on large-scale heat pumps for non-domestic users to
2020, followed by a growing focus on the domestic market in the 2020s.
• Commitment to funding should be combined with actions to reduce funding costs by addressing
non-financial barriers (through marketing campaigns and installer training) and by reducing the cost
of capital factored in to the tariffs (through extending the Green Deal or low-cost finance options to
cover low-carbon heat).
• Beyond 2020, long-term affordability concerns of the RHI imply the need to transition to alternative
approaches. Options include regulation (for example, in the form of progressive standards),
alternative forms of finance, a carbon tax and a greater role for local energy planning.
This should be part of a broader delivery plan which includes a policy framework for new build and
heat network infrastructure, and is integrated where possible with fuel poverty and energy efficiency
programmes.
New build
New homes are expected to make up around 20% of the building stock in 2050, but only 10% of
heating demand. They are therefore less critical than retrofit to meeting carbon budgets. However,
new build properties can play an important role in boosting supply-chains for low-carbon heat
technologies and they present fewer barriers to heat pumps than retrofit:
• There is an opportunity cost of constructing new buildings without appropriate measures that then
need to be retrofitted. In particular, heat pumps can be fitted at a lower cost in new homes and
with optimal design conditions.
• There are spillover benefits to retrofitting existing homes if the supply chain and related expertise is
boosted by the delivery of low-carbon heat to new build.
A delivery plan for low-carbon heat should cover both new build and existing buildings. Zero Carbon
Homes and Zero Carbon non-domestic buildings policy (Sections 4 and 5) should therefore seek to
encourage the deployment of low-carbon heat measures, unless heating requirements are very low.
Alongside specific measures on existing buildings, this should be used to improve the uptake of lowcarbon heat across all properties.
Networked low-carbon heat solutions
Heat networks
Heat networks are a key enabling technology for decarbonising heat in high density areas, where other
options are limited.
Good progress has been made in supporting feasibility studies for heat networks, though it is currently
unclear to what extent these will translate into a major expansion of district heating schemes.
• In 2014 there was strong demand from local authorities in England and Wales for funding from the
Heat Networks Delivery Unit (HNDU) for feasibility studies, with £2 million awarded in early 2014 by
DECC, followed by £7 million in 2014/15. A further £3 million is to be allocated by March 2016, which
will bring the total up to £12 million by the end of this financial year.
• DECC has also targeted £7 million of innovation funding at heat networks (Box 2.1)
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Challenges ahead include facilitating development funding, future-proofing networks and putting in
place regulation for the sector (Box 2.2).
Government should extend the functions currently provided by HNDU, with an expanded focus on
supporting network development.
• HNDU includes a number of industry experts and has provided valuable support to local authorities
alongside funding.
• There is a risk that the current momentum and progress made in capacity-building will dissipate
without Government commitment to heat network roll-out.
In the medium term, DECC will need to come to a view on the case for additional capital funding and
an appropriate level of regulation for heat networks.
There is an opportunity to capitalise on heat network roll-out by developing local energy plans
which take account of the building stock and supply-side options, and can take a wider approach to
appraising network investment options. By pooling data, this could equally provide a springboard for
a more integrated approach to heat and energy efficiency, and as a basis for targeting fuel poverty
measures (Box 2.2). This route should be assessed within the context of a low-carbon heat delivery
plan. We are undertaking further research in this area which will feed in to the Fifth Carbon Budget
Advice later this year.
Biomethane
An alternative to new heat networks in some areas might be the use of bioenergy injected directly into
the existing gas grid. Biomethane resources can also be deployed in other sectors long-term, including
as a means of decarbonising high-grade industrial process heat. To 2030, our central decarbonisation
pathway for meeting carbon budgets includes 27 TWh of biomethane, enough to heat around 2
million homes.
With support through the RHI, the theoretical maximum injection capacity of biomethane increased
from 0.09 to 1.85 TWh in 2014.15 Feedstocks are largely agricultural, with around half the contribution
from food waste, and a smaller but growing share from sewage sludge. Further action to reduce food
waste to landfill (Chapter 6) would help secure a sustainable feedstock stream for biomethane from
anaerobic digestion.
15 This is according to figures from the Green Gas Certification Scheme, where a theoretical maximum generation is based on plant operating 24 hours a day throughout the year.
It is therefore higher than current volumes (the RHI has supported around 0.2 TWh of biomethane injected into the grid to date). The increase was despite significant policy
uncertainty due to the tariff and banding review of biomethane over the course of 2014.
Chapter 2: Progress reducing emissions from buildings 83
1
Box 2.1. Innovation in low-carbon heat and buildings technologies
Low-carbon heat
Total public funding for low-carbon energy innovation delivered by members of the Low Carbon Innovation
Coordination Group, which brings together the major public sector backed organisations working in this area, was
forecast at around £800 million during the previous Spending Review period (2011-2013). While initially mainly focused
on electricity and buildings energy efficiency, heat decarbonisation has seen a growing interest over the past year, with
a stronger focus on demonstrator projects.
• Innovate UK and the Scottish Government under its CARES scheme and Local Energy Challenge Fund have set
up two funding streams for feasibility studies and large-scale local low-carbon demonstrators, of £0.35 million
and £20 million respectively. A number of the projects focus on integrating low-carbon heat with demand-side
management and heat storage.
• DECC launched a smaller pot of £7 million for 16 low-carbon heat projects, of mixed feasibility and demonstration
funding. The shortlisted projects range from a combined solar PV and heat pump project with interseasonal
ground recharge, to a scheme trialling super insulated pipes, to industrial waste heat recovery.
• Innovate UK also launched the Energy Systems Catapult in 2015 which has a number of heat-related themes, including
localised energy systems, integration of energy storage, advanced control solutions and heat network solutions.
In order to meet carbon budgets, key areas for future technology development include heat storage and system
integration. New technologies, business models and financing mechanisms can open up new markets and guide
investment.
• Phase change materials used for ‘heat batteries’ provide a means of smoothing heat demand peaks alongside
conventional hot water storage tanks and solar ground recharge.
• Integrating heat with other energy supply and demand-side management can help optimise the overall system
functioning and costs. A 2013 study found that the UK possesses poor scientific capabilities across the key
decentralised energy research areas (i.e. district heating, heat pumps) but relatively strong capabilities in PV.
• New business models for delivering energy services are a key area of research, including a greater role for
community energy, shared ownership models and smart systems.
Continued public support in these areas will be important, particularly in bridging the gap between research councilfunded programmes and heat technology markets.
Sources: HMT (2011) The Carbon Plan. Skea, J., Hannon, M. and Rhodes, A. (2013) Research Councils UK Energy Programme Strategy Fellowship Energy Research and Training
Prospectus: Report no.3, Energy in the Home and Workplace.
Box 2.2. Heat networks and locally-led delivery
Heat networks
A major expansion of low-carbon heat networks will require progress in a number of areas:
• Current HNDU funding is limited to feasibility studies, and it does not support local authorities in the development
of local energy plans. Given the benefits of local coordination for energy and infrastructure planning, Government
should consider supporting local authorities in this work and formalising their role.
• Sources for capital funding include the Green Investment Bank, the Public Works Loan Board, the District Heating
Loan Fund in Scotland, as well as other European funding and grant schemes. Achieving roll-out of heat networks
consistent with the 15% potential by 2030 highlighted in the DECC Heat Strategy will require further coordination
and support.
• Most schemes currently under development use gas Combined Heat and Power (CHP) as the primary technology.
A falling power sector emissions intensity means that gas CHP can only deliver carbon savings until the late 2020s.16
Given that the network infrastructure is expected to last upwards of 50 years, there is a need for schemes to assess
low-carbon transition options in order to future-proof the networks.
16
16 Based on modelling by LCP for DECC, LCP (2014) Modelling the impacts of additional Gas CHP capacity in the GB electricity market. Available at: https://www.gov.uk/government/
uploads/system/uploads/attachment_data/file/389070/LCP_Modelling.pdf DECC based their analysis on a power sector decarbonisation scenario which achieves an average
grid emissions intensity of 100g/kWh by 2030. This suggests that new gas CHP has the potential to save carbon until around 2032. The CCC central power sector decarbonisation
scenario is more ambitious, aiming to achieve 50-100g/kWh by 2030.
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Box 2.2. Heat networks and locally-led delivery
• Research undertaken by Which? has highlighted a number of issues linked to consumer protection and poorly
designed schemes. Whilst a voluntary code of practice will provide a useful model, the industry may benefit from
being set on a more equal footing with other regulated utilities.
Continued Government support is required in these areas.
Locally-led delivery: linking up heat decarbonisation with energy efficiency and fuel poverty
In our 2014 Progress Report, we set out the case for linking the Green Deal and the RHI as a means of reducing finance
costs and thereby the overall funding costs of the RHI. This would build on existing links between the schemes (chiefly,
the requirement for a Green Deal assessment to take place before the RHI can be obtained, along with the installation
of loft and cavity wall insulation where this is identified in the assessment).
Local energy planning provides a means of taking a more integrated approach to buildings decarbonisation and
energy infrastructure planning. This could help mitigate the risk of funding going towards competing building-scale
and network solutions.
• The Energy Technologies Institute (ETI) has developed software to support local energy planning and infrastructure
decision-making, called Energypath Networks. The next steps are to pilot the approach working with the Greater
Manchester Combined Authority, Newcastle City Council and Bridgend County Borough Council (together with the
Welsh Government).
• The Government published the first community energy strategy in 2014. This vision included a role for local
authorities to support community energy through partnerships, through investment and by providing a positive
planning and policy environment. A number of local authorities have set up partnerships with energy suppliers and
other organisations to support community energy (examples include Cheshire East Council and Ovo Communities,
Oxford City and Oxford County Council and Low Carbon Hub).
• Evaluation of these partnerships within the context of other local energy planning would provide useful evidence
for developing a low-carbon heat action plan for the 2020s.
As highlighted in a recent ETI report on heat, there is currently no single body tasked with strategic oversight of
electricity, gas and heat infrastructure decision-making and coordination.
• There is little incentive for network operators to engage with developers and community organisations.
• There are a small number of counter-examples of electricity distribution network operators setting up funding
for community groups (Northern Power Networks) or going into joint ventures on low-carbon heat such as
biomethane.
There is a role for Government in reviewing the structure of the system, and supporting the development of new
business models which are adapted to the demands of energy system transition.
Source: ETI (2015), Smart systems and heat Decarbonising Heat from UK Homes. LCP (2014) Modelling the impacts of additional Gas CHP capacity in the GB electricity market.
Which? (2015), Turning up the Heat.
4.
Residential buildings
(a) Implementation of measures
Improving energy efficiency through better insulation is important for reducing emissions, energy bills
and fuel poverty. In 2014, the second year of the new policy to drive energy efficiency in the residential
sector (the Energy Company Obligation and the market-based Green Deal), there was an improvement
in installation rates17 for insulation measures compared to 2013. However, uptake continued to remain
well below rates under the previous schemes (Carbon Emissions Reduction Target and Community
Energy Saving Programme) which operated during the first carbon budget period (Figure 2.4):
17 Installation rates are based on uptake delivered under ECO, Green Deal Finance, cashback (England and Wales only) and the Green Deal Home Improvement Fund (England and
Wales only). Due to lack of data availability, we are unable to report on the delivery of measures under the Green Deal Communities Fund and devolved schemes (e.g. Arbed in
Wales).
Chapter 2: Progress reducing emissions from buildings 85
1
• Lofts: Although installation rates of loft insulation increased by 67% to 217,000 in 2014, this remains a
quarter of the level during 2008-12. The high uptake achieved during the first carbon budget means
that the cumulative uptake by 2014 was above our indicator trajectory. However, uptake would fall
below our trajectory by 2019 if annual uptake remained at 2014 levels. As in 2013, ECO was the main
mechanism driving uptake, while Green Deal Finance only delivered around 700 installations.
• Cavity walls: There was an 87% increase from 2013 to 2014, with the number of installations in 2014
totalling around 321,000. ECO delivered the bulk of measures, equally split between easy-to-treat
and hard-to-treat cavity wall insulation. In terms of cumulative uptake, levels are slightly below our
indicator trajectory for 2014.
• Solid walls: The uptake of solid wall insulation more than doubled to over 60,000 measures in 2014,
although cumulative uptake is almost 500,000 short of our indicator trajectory. The ECO accounted
for around 80% of the uptake, while the additional injection of money under the new Green Deal
Home Improvement Fund (GDHIF) accounted for a further 14% of installations.
There still remains a large number of lofts and cavity walls to insulate in order to meet carbon budgets
(Figure 2.4), as well as a high number of solid wall homes.
1.8
4.5
1.6
4.0
1.4
3.5
1.2
3.0
1.0
2.5
0.8
2.0
0.6
1.5
0.4
1.0
0.2
0.5
0.0
Cavity wall
Solid wall
Boilers
Total loft
Millions of remaining potential
Millions of installations
Figure 2.4. Annual installation rates (2008-14) and remaining potential
2008
2009
2010
2011
2012
2013
2014
Remaining
potential
0.0
Source: DECC (2014), CCC calculations.
Note: Remaining potential to meet fourth carbon budget. Savings from boilers are not included in cabon budgets as uptake is included in the baseline.
As in previous years, boiler replacement proceeded well. Driven by the 2005 Building Regulations,
which mandated highly efficient condensing boilers, 1.5 million new efficient boilers were installed
in the existing housing stock in 2014. This takes the cumulative uptake to 9.3 million boilers, which is
2.5 million above our indicator trajectory. Energy efficiency policy only delivered a small proportion of
these new boilers, with ECO’s Affordable Warmth sub-obligation subsidising around 124,000 boilers.
Electricity demand from households peaked in 2005 at 126 TWh and has been declining since.
Improvements in the energy efficiency of appliances have more than offset the increase in the
number and use of those appliances. However, stock penetration of wet and cold appliances with the
highest efficiency ratings still remains low:
• Cold appliances: A++ or higher still only accounts for around 1% of the total stock in 2013, which is
below our indicator trajectory of 6%.
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• Wet appliances: A+ or better accounted for 14% of the total stock in 2013, compared with our
indicator trajectory penetration rate of 21%.
Minimum energy efficiency standards under the EU Ecodesign Directive are being tightened gradually
but there is no specific policy to drive uptake of the most efficient appliances, other than the EU
energy labelling scheme.
Numbers of efficient LED lamps have only seen a small increase to just over 4.6 million out of a total
lighting stock of 724 million. The EU Commission recently postponed the phase-out of inefficient
halogen lamps by two years to September 2018. This decision is likely to delay LED uptake.
Energy efficiency measures continue to provide scope for cost-effective abatement. Insulation
measures are also important to make the housing stock more suitable for heat pumps. Furthermore,
energy efficiency plays a key role in fuel poverty alleviation. It is therefore crucial that the new
Government improves the effectiveness of energy efficiency policy.
(b) Policy
Energy Company Obligation & Green Deal – current status
The GB-wide Energy Company Obligation (ECO) was introduced in January 2013 with the dual purpose
of carbon reduction and fuel poverty alleviation. Paid for by a levy on energy bills and worth around
£0.8 billion per year18, it provides support for a range of energy efficiency measures. In Scotland
and Wales, ECO delivery is supplemented by a number of devolved policies, the majority of which
are focused on fuel poverty alleviation (Chapter 7). In Northern Ireland, energy efficiency policy is
fully devolved.
The ECO was amended in April 2014 after just over one year of operation. The overall funding envelope
(down from around £1.4 billion) and ambition of the obligation were reduced and the focus changed
towards delivering more low-cost measures. This resulted in a large increase in the volume of loft and
cavity wall insulation being installed in 2014, although these remain below pre-ECO levels. Solid wall
insulation numbers have dropped. Delivery to fuel poor households has also been affected.
• The carbon saving ambition under the Carbon Emissions Reduction Obligation (CERO) was reduced
by 33% from 20.9 MtCO2 lifetime savings to 14 MtCO2 as suppliers switched away from the more
costly solid wall insulation. It accounts for around 30% of ECO spending.
• Targets for the Carbon Savings Community Obligation (CSCO) and the Home Heating Cost
Reduction Obligation (HHCRO) remained unchanged and have been extended to March 2017.
Boilers under HHCRO accounted for 70% of all measures in 2014. Following early delivery of the
target by suppliers, total measures fell by 30% in 2014 compared to 2013.
There is evidence that the ECO currently fails to target fuel poverty effectively. In 2013, the number
of households in fuel poverty in England was estimated at 2.35 million, representing approximately
10% of all English households. The level of fuel poverty has seen little change over the last decade.
The devolved nations, which use a different measure of fuel poverty, have even higher percentages of
households in fuel poverty (Chapter 7).
Estimates19 suggest that while almost all CERO support goes to able-to-pay households, even the ECO
elements targeted at fuel poverty alleviation fail to reach the fuel poor. Only 12% of measures under
CSCO and 30% of measures under HHCRO are estimated to reach the fuel poor, although many more
are going to other lower-income households. If England’s new fuel poverty targets are to be achieved,
a policy better targeted at the fuel poor and with additional funding is required (Box 2.3). Fuel poverty
18 Based on DECC’s estimate of 2015-17 average delivery costs in the 2014 ECO Impact Assessment. Actual spend may differ.
19 Energy Bill Revolution and Association for the Conservation of Energy (2015) Left out in the cold.
Chapter 2: Progress reducing emissions from buildings 87
1
targets in the devolved administrations are also currently off-track (Chapter 7) and both the Scottish
and Welsh governments have identified the changes in the ECO as a particular reason for a scalingdown of delivery over the last year.
Cuts in the ECO were supposed to be carbon-neutral and compensated for by additional measures
funded by the taxpayer, although as yet no assessment is available of the amount of carbon saved by
these.
• The Green Deal Home Improvement Fund (GDHIF) was first launched in June 2014, with a further
two rounds following in December 2014 and March 2015 and a total spend of around £220 million.
The GDHIF has proved very popular with eligible households in England and Wales and by the end
of February 2015 it had accounted for the delivery of over 18,000 measures. Most of the funding
has gone to owner-occupied households, with a small proportion claimed by registered social
landlords. 70% of GDHIF funds have been used to support solid wall insulation.
• The Green Deal Communities schemes provided £88 million in 2014 to 24 local authorities in
England. The aim was to provide energy efficiency measures to 32,000 homes, to be rolled-out on a
street-by-street basis.
In contrast to the popularity of the GDHIF, the 7% financing costs of taking out a Green Deal plan
continues to hinder uptake, with a total value of Green Deal finance plans by April 2015 of only £48
million. This compares to an initial ambition of up to £1.3 billion by the end of 2015. While there has been
an increase in delivery in early 2015 (over 2,500 measures from January to March, compared to 7,000
for the whole of 2014), it is unlikely that a much higher uptake can be achieved without a reduction
in the costs of the scheme. In terms of the measures being delivered, over half were for solar PV and
condensing boilers, which raises the question as to whether the scheme is delivering additionality
(i.e. whether the measures would have been taken up in the absence of Green Deal finance).
Box 2.3. England’s new fuel poverty target and strategy
In 2014, a statutory instrument was adopted in England which sets out a new fuel poverty objective of ensuring that
as many (as is reasonably practicable) of the homes of persons living in fuel poverty have an energy performance
certificate (EPC) rating of Band C, by 31st December 2030.
Analysis conducted by CSE for the Committee in 2014, which fed into our response to DECC’s consultation on a
new fuel poverty strategy, indicated that effective targeting of energy efficiency and low-cost heat measures to the
fuel poor could significantly reduce fuel poverty levels in England from around 11% in 2013 to below 5% by 2030.
Furthermore, this could be achieved while also meeting the fourth carbon budget.
Our analysis estimated that meeting the Government’s EPC target of C by 2030 would require annual funding of at
least £1.2 billion a year, with current funding commitments under the ECO (nominally around £0.7 billion annually for
England) falling short of this, as well as being only partially focussed on fuel poverty. We therefore recommended more
funding be made available in order to achieve the target (e.g. from infrastructure funding).
In the Government’s fuel poverty strategy, which was published in March 2015, there were no long-term funding
commitments beyond the financing of short-term pilots and extra funding for off-grid homes:
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Box 2.3. England’s new fuel poverty target and strategy
• Pilots: to encourage innovation, DECC is making available £3 million funding to run new pilots, which will be used
to feed into the design and delivery of future support:
– ‘Warmth on prescription’: £1 million has been allocated to nine local authorities to fund a one-year pilot to
improve health and well-being. Working in partnership with the NHS, doctors will be invited to prescribe
energy efficiency home improvements to patients they judge to be ill in part because of fuel poverty. A similar
scheme in Sunderland demonstrated the health benefits, with reduced GP and hospital visits for patients with
chronic obstructive pulmonary disease following the uplifting of the EPC of their homes from a G to a C rating.
• Local fuel poverty innovation funding: A further £2 million will be spent on piloting projects that can provide
innovative approaches to alleviating fuel poverty for off-gas grid, park homes and community energy approaches.
•
Improving the reach of support to certain high fuel-cost homes:
– Non-gas homes: For the second phase of the ECO (2015-17), the design of the scheme has been revised to boost
delivery to these homes. DECC estimates this will increase the amount of Affordable Warmth funding going
to this group from 2% (Jan 2013-Sep 2014) to 30%. At the same time, DECC will improve the mapping and
identification of non-gas homes.
– Central heating fund: A £25 million fund was launched in March 2015 for local authorities to support up to 8,000
fuel poor off-grid households. This will focus on the delivery of first-time central heating systems.
– Park homes: The Government will undertake additional research on the specific drivers of fuel poverty for
residents of park homes (mobile homes occupied as permanent residences).
Progress towards the 2030 target will be reported against key indicators, which will set out the scale and extent of
action taken to tackle fuel poverty. The indicators include SAP rating, the number of fuel poor with condensing boilers,
central heating, loft and cavity wall installation, renewables installed in non-gas homes; and children in fuel poverty.
However, DECC has not included a reliable indicator for health and wellbeing, and work is on-going to remedy this.
Future policy for home energy efficiency
Over the past few years, energy efficiency policy has seen numerous changes, substantially affecting
the delivery of measures and eroding confidence in the supply chain. Energy efficiency is important for
decarbonisation and for meeting fuel poverty targets. We have previously raised concerns about the
overall level of funding available and issues of targeting and design.
The ECO currently only runs to 2017. DECC should, by mid-2016, put in place an extension or
replacement policy for a period of at least five years, thus providing clarity to the supply chain. This
should focus on:
• Meeting targets for fuel poverty: we have previously identified that fuel poverty spending
in England is insufficient to meet the newly legislated fuel poverty target, while targets in the
devolved nations are also not being met. Future policy needs to address this deficit through a
combination of GB-wide and nation-specific policies.
• Improved delivery: Preliminary evidence from the Green Deal Communities scheme and
programmes in place in Wales and Scotland suggests that local authority-led delivery may be
effective. It also offers opportunities for a better integration of energy efficiency, fuel poverty and
low-carbon heat approaches. DECC should therefore consider a larger role for locally-led delivery.
This should build on a comprehensive evaluation of existing schemes.
Chapter 2: Progress reducing emissions from buildings 89
1
A potential challenge to the future uptake of energy efficiency measures is the June 2015 ruling from
the European Court of Justice (ECJ) that the UK’s reduced VAT of 5% rate for energy-saving materials for
housing (such as insulation) violates the EU’s VAT Directive. The low VAT rate also applies low-carbon
heat options such as heat pumps. Applying a 20% VAT would make these measures less cost-effective
and may have to be compensated for.
Government and others are still reviewing the implications of the ruling and next steps. We will
consider whether the ruling has a significant impact on the UK’s ability to meet carbon budgets or on
the ambition for the fifth carbon budget.
Domestic RHI
The domestic RHI has supported 33,000 installations since its launch in April 2014, 70% of which were
legacy applications.20, 21 This included 14,100 air source heat pumps and 4,400 ground source heat
pumps of which 70% were legacy applications. Addressing the awareness and upfront cost barriers are
critical. Options include:
• Linking the RHI to the Green Deal could help raise its profile as well as boost uptake.
• Examples of awareness raising include the Scottish Government funding the Energy Saving Trust
to send 40,000 letters to residents promoting the domestic scheme as part of the ‘Feel the Heat’
campaign in 2014.
Beyond this, tackling the barrier created by high upfront costs would help fuel poor consumers to
benefit from the financial returns available under the RHI. These currently mainly benefit householders
with existing financial resources to cover the upfront investment. Other options discussed in our 2014
Progress Report include targeting part of the RHI to the fuel poor, or ring-fencing part of the budget
towards capital subsidies. Ongoing work to make funds available through third parties may also have a
beneficial effect.
Other policy developments
During the last 12 months, there have been new developments in a number of policy areas which will
result in carbon reductions over time.
• Minimum energy performance standards for the private rented sector: Regulations passed into
law in early 2015 will require private landlords in England and Wales to improve the energy efficiency
of the least efficient properties. From 2018, no F and G rated properties can be rented out although
in practice, landlords only have to install measures that can be funded under the Green Deal. There is
also no provision for tightening the regulations over time, as we have previously recommended. The
regulations will affect just over 15% of homes but exclude around one million household spaces22
that can be defined as Housing in Multiple Occupancy (HOM). Many of the occupants living in HOMs
are vulnerable and/or fuel poor. Scotland is currently preparing a consultation for its own energy
performance regulations which may include owner-occupied housing.
• Zero carbon homes: From 2016, homes in England will have to be built to zero carbon standards,
with the devolved administrations following by the end of 2020 to conform with EU requirements
for ‘nearly zero energy’ buildings under the Energy Performance of Buildings Directive. For England,
the 2015 Infrastructure Act provides enabling powers for off-site carbon abatement measures
(so-called ‘allowable solutions’). A further tightening of Part L of the Building Regulations is also
required, although as yet there is no clear timetable as to how the introduction of the Zero Carbon
20 DECC (2015) RHI statistics, April release.
21 Installations commissioned between 15th July 2009 and 9th April 2014 (before the start of the domestic RHI) are referred to as ‘legacy’ installations.
22 Future Climate & the Centre for Urban Research and Energy (Manchester University) (2015), ‘Housing in multiple occupancy: energy issues and policy’.
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Homes standard will be achieved in 2016. Furthermore, due to exemptions and the way allowable
solutions will be implemented, it is unlikely that carbon savings will be maximised.
– In spring 2015, the Government announced an exemption for small developments below 10
units. No rationale was provided for this exemption, although it has committed to a review after
three years. Together with changes highlighted in our earlier Progress Reports, the Zero Carbon
Homes standard has now been watered down from its initial ambition. No further exemptions
should be granted.
– While in principle, allowable solutions can be a sensible way to achieve cost-effective solutions,
we remain concerned about the risk that they will disincentivise low-carbon heat options, as set
out in our 2014 Progress Report.
The Department for Communities and Local Government (DCLG) should now implement the
zero carbon homes standard without further weakening, ensuring investment in low-carbon heat.
Additionally, as discussed in our Adaptation Progress Report, DCLG should evaluate the evidence
and introduce a new standard or regulation on overheating in new homes.
• Products policy: in 2014, under the Ecodesign Directive new minimum performance standards
were introduced for vacuum cleaners and cooking appliances. These appliances account for a
relatively small amount of residential electricity consumption (e.g. 7.5% for ovens and hobs).
5.
Non-residential buildings
1
(a) Tracking progress
Tracking progress in non-residential buildings is made difficult by the lack of data on energy efficiency
uptake. There is however little evidence of sector-wide progress.
• Energy intensity (measured as energy consumption per unit of output) has remained flat since 2007
in both public and commercial buildings (Figure 2.5).
• The CRC Energy Efficiency scheme covers 76% of electricity consumption and 50% of gas
consumption in non-residential buildings, as well as large industrial and agricultural firms outside
the ETS. Although scheme participants recorded a 5% drop in total energy consumption in the last
two years of data (covering 2012/13 and 2013/14), there is little evidence of any additional impact in
public and commercial buildings.
– Public gas consumption in the CRC fell by 11%, compared to a sector-wide fall of 17%.
Commercial gas consumption in the CRC fell 10%, compared to a sector average of 16%.
– Commercial electricity consumption fell by 3% for organisations in and outside the scheme.
Public sector electricity consumption is the exception, falling by 7% for organisations in the CRC,
compared to a sector average fall of 1%.
– Since the reporting of turnover has been dropped, it is not possible to compare between years
on a like-for-like basis (using an energy intensity metric). There is a good case for reinstating this
metric or another measure of output.
Our scenarios for meeting carbon budgets include opportunities for reducing energy consumption by
around 18%, although more may be possible. This suggests that significant cost-effective abatement
potential remains.
Chapter 2: Progress reducing emissions from buildings 91
Figure 2.5. Energy intensity of public and commercial buildings
160
Commercial output
(index of real £GVA)
Commercial energy
consumption per
unit output
Public output
(index of real £GVA)
Public energy
consumption per
unit output
140
Index 2000=100
120
100
80
60
40
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1991
1990
0
1992
20
Source: DECC (2014) Energy consumption in the UK.
There are several sub-sectoral schemes which demonstrate some progress in both the public and
commercial sector.
• In the commercial sector, voluntary schemes include one set up by the British Retail Consortium,
whose members achieved an 8% reduction in absolute carbon emissions between 2005 and 2013.23
They have now signed up to a new set of targets.
• In the public sector, the Central Government ‘Greening the Government’ scheme and the Higher
Education Funding Council for England (HEFCE) have both established mandatory reporting and
targets. NHS England has a voluntary scheme in place. Beyond this, research by the ETI shows a
spectrum of activity from local authorities.24
– The ‘Greening the Government’ scheme set a number of environmental targets including one
to cut GHG emissions from the central government estate by 25% by 2015. With one year to
go, a 20% cut was reported in 2014; 16 out of 25 departments have met the target, through
a combination of downsizing and some large-scale energy efficiency programmes. The most
notable of these is a £105m spend-to-save programme set up by the Ministry of Defence, which
makes up half the total emissions and has so far achieved a 15% reduction in emissions.
– The HEFCE scheme requires universities to report on emissions and set targets. This is supported
by a ‘Revolving Green Fund’ for energy efficiency measures.25 The NHS England scheme is
voluntary and without additional financial support.
• The Scottish Government is currently putting in place a requirement on public bodies to monitor
and report on emissions, which will facilitate energy savings and provide a means of tracking
progress.
Key elements of success for sectoral approaches are mandatory monitoring and reporting of emissions,
and having an overarching strategy and targets in place which are adequately resourced.
23 See CCC (2014) Progress Report.
24 Energy Technologies Institute and Hawkey, D., Tingey M., and Webb, J. (2014) Local Engagement in UK Energy Systems, A Pilot Study of Current Activities and Future Impact. Available
online: http://www.eti.co.uk/wp-content/uploads/2014/07/Edinburgh-Report-Version11.pdf
25 Under the current funding round (round 4), £28.8 million has been awarded for projects to date, with 50% of the funding coming from Salix Finance and 50% of the funding
coming from HEFCE.
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(b) Policies
Policy rationalisation
In last year’s Progress Report, we highlighted the overly complex nature of the policy landscape, which
has a number of overlapping carbon price instruments and information requirements. There is scope
for rationalisation while providing more consistent incentives, along with plugging gaps (such as SMEs).
In principle, there is only need for one instrument for each of the following functions:
• Carbon price instruments. There is a wide variation in current levels of carbon pricing across
firms and fuels.26 This should be consistent to minimise distortion. We recommended previously
that the carbon price aspect of the CRC Energy Efficiency Scheme should be abolished and the
Climate Change Levy increased, with a uniform carbon price across fuels, unless there is compelling
evidence to suggest this would reduce the corporate profile of energy efficiency.
• Regulation. Commercial rented premises will be subject to minimum standards from 2018, similar
to privately rented homes (Section 4). With 60% of commercial sector premises being rented,
this should drive uptake for energy efficiency measures. A clear timetable for ratcheting up the
standards over time would improve investor confidence and unlock additional retrofit.
• Information. A clear source of information on operational energy consumption is essential to
understand and reduce energy consumption, but one good quality source would be preferable
to multiple weak sources. This source could be enhanced energy audits or enhanced mandatory
Display Energy Certificates (DECs). Only with such a mechanism in place would it be justified to
drop the reporting requirements under the CRC.
1
– Energy Savings Opportunities Scheme (ESOS) energy audits. Businesses will undertake
the first round of audits in 2015, but the extent to which they will lead to uptake of the top
cost-effective measures identified remains uncertain. The implementation of the audits in the
UK, as required under the EU Energy Efficiency Directive, has been weak (audits every three
years, no reporting requirement). The new Government should assess the case for enhancing
the audits (e.g. through signposting to finance, follow-up support, mandatory reporting and
benchmarking), and extending their scope to SMEs.
– Display Energy Certificates. These would need to be enhanced to meet the Energy Efficiency
Directive requirements. DECs are currently the only effective source of benchmarked operational
energy demand data. They are an important tool for identifying energy efficiency opportunities
which can help limit the impact of rising energy prices on public finances.27
Data availability continues to be a major issue affecting decarbonisation policy for non-domestic
buildings. Steps to address this would benefit policy makers and energy planners, including at a
minimum plans for DCLG to publish DEC data on the Government website.
Energy efficiency policy for SMEs remains a significant gap in the current policy framework and is
likely to be an area where additional measures are needed. Good practice in this area includes lowcost finance by the KfW bank in Germany (see below), along with the Scottish and Welsh Resource
Efficient initiatives, which provide support to business for developing and implementing energy
efficiency initiatives.
26 CCC (2014) Progress Report.
27 See the Committee’s letter to the Secretary of State for Communities and Local Government in response to the consultation on the future of DECs, available at: http://www.
theccc.org.uk/publication/letter-response-to-the-consultation-on-changes-to-the-display-energy-certificates-regime-in-public-buildings/
Chapter 2: Progress reducing emissions from buildings 93
Non-domestic RHI
The non-domestic RHI is the main policy instrument for meeting both the renewable heat share of
the 2020 Renewable Energy target and the 2020 level of abatement in the carbon budgets, which are
aligned. It is therefore the cornerstone of low-carbon heat policy to 2020.
• The 2013 tariff review resulted in a new tariff of 2.5 p/kWh for air source heat pumps, alongside the
existing ground and water source heat pump tariff. This has not succeeded in broadening the mix
of technologies taken up beyond bioenergy.
• Overall delivery has increased however, with total investment now at the level envisaged by the
budget caps, after the initial years of underspend.
• Over 30% of the RHI has funded biomass capacity in agriculture and forestry (Figure 2.6) where it is
likely that there are existing sources of waste feedstock.
• Only a fraction of uptake to date has been in the public sector. This is a key area where the
Government could look to address the shortfall to 2020.
This underlines the need for a major push for low-carbon heat to reduce the carbon gap in meeting
the fourth carbon budget, with a focus on non-domestic heat pumps replacing fossil fuel boilers.
Figure 2.6. Non-domestic RHI delivery (MW capacity) by SIC code
Capacity of accredited installations (MW)
550
Agriculture
Non-residential buildings
Industry
Other
500
450
400
350
300
250
200
150
100
50
0
1
16
85
47
2
10
93
82
87
32
31
86
68
SIC code
1
16
85
47
2
10
93
Crop and animal production, hunting and related service activities
Manufacture of wood and of products of wood and cork,
except furniture; manufacture of articles of
straw and plaiting materials
Education (SIC code: 85)
Retail trade, except of motor vehicles and motorcycles
Forestry and logging (SIC code: 02)
Manufacture of food products
Sports activities and amusement and recreation activities
82
87
32
31
86
68
Office administrative, office
support and other business
support activities
Residential care activities
Other manufacturing
Manufacture of furniture
Human health activities
Real estate activities
Sectors < 1% installed capacity
Source: DECC (2015) RHI monthly deployment statistics April 2015.
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Financing energy efficiency and low-carbon heat
Commercial finance
Finance to businesses for energy efficiency and low-carbon heat is piecemeal, with no central source
for firms.
• The non-domestic Green Deal has not been financed to date.
• Finance at commercial rates is available from the Green Investment Bank, although this has been
mainly geared towards a small number of larger investments in areas such as street lighting or
district heating.
• Siemens, in partnership with the Carbon Trust, are providing commercial rate loans up to a total of
£550m for energy efficiency projects.
• 0% finance is available to businesses in Wales and Northern Ireland.
This compares to loans totalling 3.2 billion euros made available by the German KfW bank in 2014 to all
businesses, including SMEs, at interest rates of 1%. The scheme is currently set to expire at the end of
June 2015.
To improve access to finance in the UK, the focus should be in the first instance on linking and
signposting to existing sources of finance. One option would be to do this as part of the ESOS energy
audit report. Over time, additional sources of low-cost finance could help unlock energy efficiency in
the commercial sector, particularly in small- and medium-sized enterprises.
1
Public sector reporting and finance
The public sector can play an important role by setting an example, unlocking wider social benefits
and driving down installation costs. Currently, public sector procurement is not sufficiently harnessed
due to a combination of capacity constraints and possible reluctance to take on additional debt.
Monitoring and reporting of emissions is an essential first step in understanding and curbing
waste – there is an opportunity cost to not having a mechanism in place. Good information on
energy demand is the cornerstone of putting together a business case for energy efficiency finance.
Discussions with fund administrators suggest that the pipeline for the HEFCE Revolving Green Fund
may have been weakened by the loss of capacity and expertise in this area, although demand for Salix
funding28 remains healthy.
Reporting of carbon emissions used to be a statutory requirement under the National Indicator
Framework and National Indicator 186, but it was abolished in 2010. Any reporting requirement would
need to be adequately resourced in light of the current strain on the delivery of public services.
• Sectoral approaches such as the HEFCE scheme and Greening the Government highlight the
benefits of taking an integrated approach to carbon mitigation through energy efficiency and lowcarbon heat, with target setting, reporting and adequate resourcing.
• The Scottish public bodies duty (Chapter 7) provides a template for requiring reporting of carbon
emissions. To be more effective, this could be enhanced with a requirement on public bodies to put
in place a strategy and targets.
28 Salix Finance provides 100% interest-free loans to the public sector for energy efficiency projects. Salix, an independent, publicly funded company, has been operating since
2004, and its loans are currently available across England, Scotland and Wales.
Chapter 2: Progress reducing emissions from buildings 95
• Whilst the public sector can apply to the Salix loans scheme, which totalled £48 million in 2013/14
and £73 million in 2014/2015,29 this only covers the capital costs of energy efficiency, implying gaps
for developing the business case, monitoring energy and emissions, and for financing low-carbon
heat. Green bonds are a potential way to plug the funding gap, as an alternative to pay-as-you-save
schemes.30
The case for enhancing public bodies monitoring and reporting requirements should be assessed
following an evaluation of the previous monitoring and reporting duties, early lessons from the
introduction in Scotland, and drawing on international experience.
Other policy areas
New standards to deliver ‘nearly zero energy’ buildings will be required under the 2010 recast of the
EU Energy Performance of Buildings directive, to apply to all new public sector buildings from 2018 and
all other buildings from the end of 2020. Additionally, previous governments committed to zero carbon
non-domestic buildings by 2019. Meeting this timetable requires an interim stage during which Part L
of the Building Regulations are tightened in 2016. This implies consulting on proposals later this year.
DCLG should set out a timetable for achieving this, along with a clear definition of the 2019 standards.
Funding of £20 million has been allocated to an Electricity Demand Reduction (EDR) pilot, which is
open to commercial, industrial and public sector organisations. The first auction took place in January
2015. A total of £1.3 million was allocated in the auction to help reduce demand by at least 1.9 GWh
during the winter peak, at a weighted average price bid of £229/kW. The Government is currently
reviewing progress to date, including scheme cost-effectiveness.
6.
Forward look
In our Fourth Carbon Budget Review, we proposed that emissions from buildings should fall to 69
MtCO2 by 2025, as part of a cost-effective path to meet carbon budgets.
Based on the latest DECC energy and emission projections, non-traded emissions (that is, those not
covered by the EU ETS) could be 94 MtCO2 in 2025, falling to 82 MtCO2 if current policies deliver.
Adjusting our emissions trajectory to reflect the slightly lower projected baseline emissions suggests
that non-traded emissions should fall to 66 MtCO2 in 2025.
This implies a policy gap of 16 MtCO2 to 2025, mostly due to low-carbon heat. Currently, there are no
proposed policies for heat after 2020.
Furthermore, not all policy savings assumed by DECC are assured. In our 2014 Progress Report, we
made an assessment of current policies to meet the carbon budgets. This assessment remains valid.
Of the 13 MtCO2 abatement forecast from current policies, 7 MtCO2 are at risk due to lack of funding, or
design or delivery problems (Figure 2.7).
• Policies with design and delivery problems include the ECO, Green Deal, EU Products Policy, the CRC
Energy Efficiency Scheme, as well as Zero Carbon Homes.
• The main unfunded policy is the RHI post-April 2016. There is also no clarity about funding for the
ECO after the end of 2017.
In order to deliver the necessary reductions in buildings emissions, it is therefore important that new
policy approaches are developed. These are summarised in Section 7.
29 See technical annex.
30 Sustainable Homes recently launched a green energy bond, aimed at local authorities.
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Figure 2.7. Assessment of current and planned policies - all buildings (non-traded)
120
Lower risk policies
At risk policies
100
Policy gap
Baseline emissions
MtCO2e
80
Cost-effective path
60
Outturn
40
20
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
0
Source: Source: DECC (2014) Updated emissions projections; CCC analysis
Notes: All data is consistent with UEP 2014; outturn values will therefore differ from latest provisional emissions estimates.
7.Summary
Buildings are important for achieving carbon budgets, both in terms of direct emissions but also in
terms of electricity demand savings, which will reduce the need for additional low-carbon power
capacity. However, bridging the large gap to the achievement of the carbon budgets identified above
will require action across a number of areas.
• Low-carbon investment. Meeting carbon budgets at least cost will only be possible with
investment in supply-chains, heat networks and improvements to the building stock now in order
to avoid incurring more significant costs in the long-run.
– Financial incentives are required in the near-term to drive uptake of low-carbon heat – without
appropriate incentives in place, the UK will struggle to meet the carbon budgets without
incurring significant other costs. Costs for the RHI are sensitive to assumptions on tariff
degression and the ability to reduce funding costs through tackling non-financial barriers, but
could be in the region of several billion pounds in 2020. It is therefore critical to bring down the
costs by addressing barriers to uptake. Continued support of heat network roll-out over the next
few years is required to realise the benefits of the initial investment in local authority feasibility
studies. Finally, clarity over the introduction of zero-carbon home standards is needed to unlock
private sector investment.
– Much of the potential for low-cost home energy efficiency measures such as loft and easyto-treat cavity wall insulation has already been realised. There is still significant potential for
measures such as solid wall and hard-to-treat cavity insulation, as well as other measures such as
floor insulation. However, these are generally more costly and often best done as part of a whole
house renovation project. Grants and subsidies will need to be provided for fuel-poor and/or
low-income homes. The Green Deal, a market-based mechanism for able-to-pay homeowners,
has not been successful to date and further incentives and/or regulation may be required to
drive the able-to-pay market (e.g. stamp duty incentives).
Chapter 2: Progress reducing emissions from buildings 97
1
• Developing future options and innovation. Heat pumps and low-carbon heat networks are
currently the two main options for decarbonising heat in buildings. A plan is required for the
2020s which ensures that we keep open these options to 2050, in the context of wider decisions
about infrastructure for heat. More broadly, technical, social and financial innovation will facilitate
the transition to a low-carbon building stock and unlock abatement potential from more difficult
options such as solid wall or floor insulation. There is a continued role for public finance in
supporting research, development and demonstration.
– Technology advances include cheaper and easier methods to insulate solid walls, floor insulation
robots which improve access to difficult spaces and reduce installation costs, phase change
materials which act as ‘heat batteries’ in buildings, along with new approaches for integrating
energy supply with demand-side management and storage.
– Innovative financing solutions include joint ownership of renewables and green bonds, whilst
new business models and tools can also help guide investment.
• Low-carbon choices. One of the most significant challenges in decarbonising the building stock
lies in understanding consumer behaviour and choices, and reflecting this in policy development.
Home energy efficiency for example is an area where many measures are cost-effective, yet
consumers do not always make rational choices. Policy often underestimates non-financial costs to
consumers. Regulation has been successful in some cases, as demonstrated through improvements
in boiler and lighting efficiency and the energy efficiency of new homes. Other approaches, such
as roll-out of energy efficiency measures on an area basis (e.g. in Wales and Scotland) have shown
some promise in recent years, but a comprehensive evaluation of these schemes is needed to
inform future policy. Financial incentives can be effective but potentially costly over time, especially
when trying to compensate for high barrier costs. For low-carbon heat, it is therefore particularly
important to address non-financial barriers such as improving consumer understanding and
confidence.
Transforming the UK’s buildings to high levels of energy efficiency and decarbonising their heat supply
will require long-term policy commitments from governments. It is also important that buildings are
made suitable for a warming climate through appropriate passive cooling measures such as enhanced
ventilation and shading. A low-carbon and resilient building stock will have a range of lasting auxiliary
benefits – lower energy bills, increased indoor comfort and health benefits.
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1
Chapter 2: Progress reducing emissions from buildings 99
Chapter 3: Progress reducing
emissions from industry
1.Industry emission trends and
drivers
2.Opportunities and challenges to
reduce emissions
3.Policy progress
4.Industrial competitiveness
opportunities and challenges
5.Forward look
6.Summary
Key messages and recommendations
Industrial activity directly accounts for a quarter of UK greenhouse gas emissions and includes
manufacturing and construction, refining of petroleum products and other energy supply
(extraction and production of oil, gas and solid fuels). In this chapter we assess industrial emissions
and energy consumption over the period 2009-2013, preliminary 2014 data, as well as policy
progress to unlock abatement potential.
Our key messages are:
• Energy and emission trends. Despite growth in industrial output, both provisional energy
consumption and emissions appear to have fallen in 2014:
– Direct CO₂ emissions fell by 6% in 2014 according to provisional estimates, following an annual
average 1% decrease over the period 2009-2013. The fall in emissions to 2013 can mainly be
explained by the disproportionate impact the recession had on carbon-intensive sectors.
While we have seen a fall in refining output in 2014, there is no clear explanation for the 6%
drop in manufacturing emissions in 2014, as output grew 3% during the year and verified
industrial EU Emission Trading System (EU ETS) emissions fell by only 0.4%.
– Manufacturing grid electricity consumption also fell by 7% in 2014 according to provisional
estimates, following an annual average 0.4% decrease over the period 2009-2013. This
suggests some energy intensity improvement to 2013. However, there is currently no clear
explanation for the 2014 fall in consumption.
1
– Previous provisional energy and emission statistics have been readjusted significantly in
following years. Provisional figures need to be interpreted with care and greater significance
should be placed on the longer trend.
• Three abatement options are most likely to play a role in future emissions:
– Energy efficiency. At present it appears that there is unlikely to be sufficient progress to meet
our estimates of potential in the fourth carbon budget: the EU ETS carbon price remains low,
as does ambition in the Climate Change Agreements.
– Low-carbon heat. Use of bioenergy could make the biggest impact in reducing industrial
emissions through to the fourth carbon budget. The main policy driver is the Renewable
Heat Incentive (RHI). Uptake of low-carbon heat in industry is currently ahead of our indicator,
although uptake needs to accelerate in the coming years to stay on track with our indicator.
Limited bioenergy resource is likely to be particularly valuable in industry, so further incentives
need to be explored to drive uptake of large low-carbon heat projects.
– Carbon Capture and Storage (CCS). The most important industry option to meet the 2050
emission reduction target is CCS. We have previously recommended that the Government
should set out an approach to demonstration and commercialisation of industrial CCS within
the 2020s. Action is now urgent. Given the limited progress to date and long lead in times, the
Government should consider proposals for a Teesside industrial cluster CCS project, and reflect
on how these could accelerate deployment of CCS to other industrial clusters.
Chapter 3: Progress reducing emissions from industry
101
Key messages and recommendations
• Industrial Decarbonisation and Energy Efficiency Roadmaps to 2050. Published in March
2015 for eight of the most heat-intensive industrial sectors. The reports identified key abatement
options for many of the sectors in line with those identified above.
• Forward look. Overall, policy is not on track with our indicators to deliver the long-term
abatement we have identified, leaving a gap of 15 MtCO2 in 2025.
Our recommendations for DECC, working with BIS, are:
Ahead of 2016 Progress Report
• Develop joint work with industry into action plans: publish plans setting out specific actions
and clear milestones to move abatement efforts forward along the paths developed with
industry in the “Roadmaps”.
Ahead of 2017 Progress Report
• Complete roll-out of “Roadmaps” to other industrial sectors: taking account of lessons learned,
roll-out roadmaps to industrial sectors not covered in first wave.
• Join-up industrial CCS with power sector projects: set an approach to commercialisation of
industrial CCS alongside the approach adopted for the power sector, including ensuring industry
can link into planned infrastructure.
• Evaluate effectiveness of compensation to at-risk industries for low-carbon policies:
independent evaluation of industries that are at-risk and effectiveness of the compensation
framework.
We set out the analysis that underpins these conclusions in six sections.
1. Industry emission trends and drivers
2. Opportunities and challenges to reduce emissions
3. Policy progress
4. Industrial competitiveness opportunities and challenges
5. Forward look
6.Summary
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1.
Industry emission trends and drivers
(a)Overview
Industrial activity includes the manufacturing and construction sectors, refining of petroleum products
and other energy supply (extraction and production of oil, gas and solid fuels).1
Direct emissions from industry accounted for around a quarter of UK greenhouse gas (GHG) emissions
in 2014 (120 MtCO₂e), of which around four-fifths are CO₂ (Figure 3.1). Of industry direct CO₂ emissions,
two-thirds comes from manufacturing (split between combustion of fossil fuels and chemical
processes). Industry consumes around a third of UK electricity produced which is around 7% of UK
GHG emissions.
Within the manufacturing and refining sectors, around four-fifths of all CO₂ emissions and two-thirds
energy consumption is accounted for by eight industries, which make up almost a sixth of UK GHG
emissions (Figure 3.2).
Under the Infrastructure Act 2015, the Committee has a new duty to advise the Secretary of State
about the impact of the exploitation of onshore petroleum on achieving the carbon budgets. That
advice must be delivered in March 2016. It will consider in detail the extraction and production of both
onshore and offshore oil and gas.
Figure 3.1. GHG emissions from industry in the context of total UK emissions (2014)
‘Manufacturing’
combustion CO2
11%
Total emissions
521 MtCO 2e
‘Manufacturing’ process CO2
2%
‘Manufacturing’ Non-CO2
4%
Refineries CO2
3%
Other energy supply CO2
4%
Other sectors
70%
Industry share of
power sector CO2
7%
Source: DECC Provisional GHG statistics, ONS Environmental Accounts, CCC analysis
Note: 2014 emission estimates are provisional. Percentage figures may not add up to 100% due to rounding.
1 From this point forward references to manufacturing will also include the construction sector.
Chapter 3: Progress reducing emissions from industry 103
Figure 3.2. Manufacturing and refining CO2 by sector (2012)
Wood
2%
Textiles
Rubber and plastics
2%
2%
Vehicles2%
Other manufacturing 1%
Electrical engineering 1%
Glass and Ceramics etc
3%
Non-ferous metals
3%
Water and waste
management 3%
Refineries
14%
Mechanical engineering
4%
Chemicals 14%
Paper, pulp and Printing
4%
Food, drink and tobacco
8%
Cement and Lime etc
9%
Iron and steel
14%
Construction
10%
Source: ONS Environmental Accounts.
Note: Percentage figures may not add up to 100% due to rounding.
(b)
Emission trends
Provisional estimates suggest that in 2014 direct industry GHG emissions fell by 6%, following an annual
average 1% decrease over the period 2009-2013 (Table 3.1). While refining output fell, there is no clear
explanation for the 6% drop in manufacturing emissions in 2014, as production grew 3% during the
year and verified industrial EU Emission Trading System (EU ETS) emissions fell by only 0.4%. Provisional
statistics are prone to revision, so we focus our assessment on the longer term trend in manufacturing
emissions (Box 3.1). We will return to the 2014 emission changes in our 2016 Progress Report, when the
statistics will have been finalised with a sectoral breakdown:
• Direct CO₂ industrial emissions fell by 6% in 2014, following an annual average 1% decrease over the
period 2009-2013.
– Manufacturing CO₂ emissions over the period 2009-2013 initially fell and then rose back up again
to their 2009 levels. This can be largely attributed to the recession, which had a disproportionate
impact on carbon-intensive sectors (Box 3.2).
– Refineries and other energy supply CO₂ emissions fell 6% in 2014, following an annual average
3% decrease over the period 2009-2013. These falls can be attributed to an equal fall in output,
with the 2014 fall explained by the closure of Milford Haven as well as disruptions at other
refineries.
• Non-CO₂ emissions in industry fell by 2% in 2014, following an annual average 2% decrease over the
period 2009-2013. This reflects the introduction of technologies to abate N2O emissions in industrial
processes and reduced methane emissions from the gas distribution network and coal mines.
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• Manufacturing grid electricity consumption also fell by 7% in 2014, following an annual average
0.4% decrease over the period 2009-2013. The falls in grid electricity consumption over the period
2009-2013 suggest some potential energy intensity improvement to 2013. However, there is
currently no clear explanation for the 2014 fall in consumption.
The recession, which had a disproportionate impact on carbon-intensive sectors, largely explains the
fall in industrial direct emissions over 2009-2013. This structural movement towards a less carbonintensive mix of industrial output was the largest contributor to falling direct emissions, with some
improvement in energy intensity and changes in the fuel mix also reducing emissions (Box 3.2).
In our 2014 Progress Report, we set out an indicator framework for monitoring progress in industry
towards meeting carbon budgets. From 2007 to 2013, industry direct CO₂ emissions declined in line
with the indicator we set out (Figure 3.3)2. Provisional estimates for 2014 suggest direct emissions have
fallen further than our indicator, but as discussed above provisional estimates are prone to revision.3
Falling investment in new plant and equipment may also suggest continued use of older, less efficient
plant. Investment in new plant and equipment fell by 24% between 2007-2009, and only in 2014 has
investment surpassed its pre-recession levels.4 The rise is a positive effect of industry returning to
growth after the recession, suggesting an increased ability to replace older equipment with the latest
more energy-efficient technology.
Table 3.1. Annual changes in industrial GHG emissions (2009-2014)
2009-2013
annual %
change
2014
% change
Manufacturing – combustion CO₂ emissions
-1%
-7%
Manufacturing – process CO₂ emissions
5%
-2%
Manufacturing – total CO₂ emissions
0%
-6%
Refineries and other energy supply – direct CO₂ emissions
-3%
-6%
Total industry direct (non-electricity) CO₂ emissions
-1%
-6%
Total industry direct non-CO₂ emissions
-2%
-2%
Total industry direct GHG emissions
-1%
-6%
-0.4%
-7%
Grid electricity energy consumption (TWh)
1
Source: NAEI GHG inventory, DECC (2014) Provisional GHG emissions, DECC (2015) Digest of UK Energy statistics (DUKES), DECC Energy Trends, CCC analysis
Notes: Manufacturing process CO2 emissions increased from 2009-2013 mainly due to recovery in steel production after the recession, where production had
declined by 30% from 2007 to 2009.
2
3
4
For analysis of other CCC indicators see Technical Annex 3.
See Technical Annex 3.
ONS Gross fixed capital formation statistics. Available at http://www.ons.gov.uk/ons/index.html
Chapter 3: Progress reducing emissions from industry 105
Figure 3.3. Industry direct (non-electricity) CO₂ emissions and CCC indicator (% change from 2007)
0
Non-electricity energy
intensity indicator
trajectory
Non-electricity energy
intensity outturn
-5
-10
-15
%
-20
-25
-30
-35
-40
2027
2026
2025
2024
2023
2021
2022
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
-45
Source: NAEI GHG inventory, DECC Provisional GHG estimates and CCC analysis.
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Box 3.1. Industrial energy provisional estimates
Provisional estimates of 2014 manufacturing combustion CO2 emissions, which come from burning fossil fuel, show a
fall in emissions of 7%, despite a growth in production of 3%.
Provisional manufacturing energy statistics as published in DECC’s Energy Trends are reported for the iron & steel sector
and for the rest of the manufacturing sector under ‘other industries’. Estimates of fuel consumption by the iron and
steel sector are based on data from the Iron & Steel Statistics Bureau (ISSB). ‘Other industries’ estimates are mainly
based on surveys of fuel suppliers, plus the difference between ISSB and fuel suppliers estimates for ‘iron and steel’. In
addition, for ‘other industries’ coal consumption, proportions of ‘unallocated’ coal imports are added.
Fossil fuel consumption increased 5% in the iron & steel sector, which accounts for 8% of manufacturing’s final fossil
fuel consumption (Table B3.1). Therefore, the 2014 fall in industry combustion CO2 emissions may be due to the
decrease in fossil fuel consumption in the ‘other industries’ sectors.
The provisional estimates of ‘other industries’ fossil fuel consumption suggests a 3% fall in 2014. Oil and gas
consumption have been estimated to fall 2% each in 2014. The other contributing factor for the provisional estimate of
a fall in industries’ fossil fuel consumption and CO2 emissions was a significant fall in coal. Provisional 2014 statistics for
‘other industries’ indicate a 14% reduction in coal consumption.
While we do not have a sectoral breakdown for coal consumption for the 2014 provsional estimates, we can look at the
2013 breakdown and production growth of the heavy coal users to see if this explains the drop in coal consumption.
DECC’s Digest of United Kingdom Energy Statistics (DUKES), shows that in 2013 54% of Energy Trends ‘other industries’ coal
consumption was from the mineral sector and 25% from DUKES definition of ‘other industries’ (wood, rubber & plastics,
other manufacturing etc). However, in 2014 the mineral sector grew by 16% and DUKES ‘other industries’ grew by 4%.
Therefore, there is no clear reason why coal consumption fell 14% in 2014.
Table B3.1. DECC Energy Trends manufacturing fossil fuel consumption
TWh
Fuel
2013
2014
2013-2014
change
2013-2014
% change
Manufacturing
Fossil fuel*
164
160
-4
-3%
‘Iron & Steel’
Fossil fuel*
11.9
12.4
+0.5
+5%
Fossil fuel*
152
147
-5
-3%
Coal
16
13
-2
-14%
Gas
85
83
-2
-2%
Oil
51
50
-1
-2%
Other
7
7
0
-1%
‘Other industries’
Source: DECC (2015) Energy Trends, CCC analysis.
Notes: *These figures do not include fossil fuel used for industrial heat or electrical autogeneration.
Provisional estimates for fossil fuel energy consumption for ‘other industries’ for the years 2011-2013 changed by 5-20
percentage points when they became final estimates the following year. Therefore, we cannot rule out that once
the 2014 energy consumption and emission statistics are finalised, they may show no divergence with industrial
production.
We will return to the 2014 energy consumption and emission changes in our 2016 Progress Report, when the statistics
will have been finalised with a sectoral breakdown.
Notes: DECC (2015) Energy Trends available at https://www.gov.uk/government/collections/energy-trends
Chapter 3: Progress reducing emissions from industry 107
1
Box 3.2. Manufacturing and refining industries non-electricity energy and emission decomposition analysis
In 2014, we commissioned Ricardo-AEA to produce a decomposition model for energy and emissions in the UK
manufacturing and refining sectors. It allows us to analyse the factors that contribute to a change in emissions.
Falls in industrial direct CO₂ emissions could be caused by:
• Output effects (e.g. recession-related emission reductions).
• Structural effects (e.g. relative mix of manufacturing output moving towards less carbon-intensive sectors),
• Switching to fuels with lower direct emissions (e.g. coal to gas, or fossil fuel to electricity).
• Energy intensity (e.g. improvements in energy efficiency, changes in product mix or plant utilisation).
This analysis shows that between 1992 and 2007 improvements in energy intensity and switching to lower-carbon
fuel were the largest contributors to the reduction in direct CO₂ emissions in the manufacturing and refining sectors.
Improvements in energy intensity averaged around 1.3% per annum over this period and switching to lower direct
emission fuels saved 0.8% per annum.
Between 2009 and 2012, for which the latest data is available, the fall in direct CO₂ emissions can be attributed mainly
to the recession’s disproportional impact on carbon-intensive industrial sectors. This structural movement towards
a less carbon-intensive mix of industrial output was the largest contributor to falling direct emissions, with some
improvement in energy intensity and changes in fuel mix also reducing emissions.
There are distinct differences in the results between the major industrial sectors. It is possible to distinguish groups of
sectors with similar experiences since 2009:
• Output down, energy intensity higher – in the refineries sector, there have been significant falls in output, while
at the same time energy intensity has increased since 2009. This sector has seen under-utilisation of plant during
the recession, as operators have either been unable or unwilling to rationalise, although there have been closures
in recent times.
• Output down, energy intensity little changed – in the steel and chemical sectors there have been falls in output,
but energy intensity has not changed significantly.
• Output down, energy intensity down – in the cement & lime, paper, and ceramics & glass sectors, both output
and energy intensity have fallen. Cement sector energy intensity has been affected by a product-mix change
towards less intensive production and the paper sector has seen closures of less efficient plants.
• Output up, energy intensity down – the food and drink sector and motor industries have shown growth in
output since 2009 (although output did fall early in the recession). There has been considerable rationalisation of
plant, which has reduced energy intensity and improved utilisation.
This analysis can only give us some indication about whether and where industrial energy efficiency is improving.
However, energy intensity is only a proxy for technical energy efficiency, and also includes the effects of changing
product mix and utilisation of plant and equipment.
Source: CCC analysis
Notes: for this analysis the manufacturing does not include the construction or wastewater sectors.
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2.
Opportunities and challenges to reduce emissions
(a)
Opportunities to reduce industry emissions
The Fourth Carbon Budget Review published in December 2013 updated our view on the scope for
reducing direct emissions in industry from around 140 MtCO₂ in 2007 to around 70 MtCO₂ in 2030
(Figure 3.4):
• Energy efficiency improvement. There is significant but uncertain potential. Our best estimate
comes from the ENUSIM model that suggests scope for reducing direct annual emissions by around
3 MtCO₂ in the period to 2020.5
• Options in energy-intensive industry. Further cost-effective options for energy-intensive industry
could reduce direct annual emissions by 9 MtCO₂ by 2030. These include increased electric-arc steel
production, clinker substitution in cement and optimisation of refineries.6
• Low-carbon heat and use of bioenergy. Modelling conducted by NERA for the Committee
suggests the potential to reduce direct annual emissions by 13 MtCO₂ by 2030. This is primarily
through use of biomass and biogas within sustainability limits, with smaller contributions from heat
pumps and combined heat and power (CHP).7
• Industrial carbon capture and storage (CCS). CCS could be feasible and cost-effective for
deployment in a range of industrial sectors during the 2020s, reducing annual emissions by 5 MtCO₂
by 2030. By 2050 industrial CCS could contribute to cost-effective reductions of around 33 MtCO₂
per year.
The ‘Industrial Decarbonisation and Energy Efficiency Roadmaps to 2050’ reports were published in March
2015 for eight heat-intensive industrial sectors that make up 70% of manufacturing and refining direct
CO2 emissions.8 The reports identified that the key abatement options for many of the sectors are in
line with those identified above. We will review this new evidence base and report on what this means
for opportunities for reducing industry emissions in our Fifth Carbon Budget Advice later this year.
Figure 3.4. 4th Carbon Budget Review industry emission cost-effective pathway (MtCO2)
MtCO2e
160
140
Energy efficiency
120
Options for energy
intensive industry
100
Low-carbon heat
Industrial CCS
80
60
40
20
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
0
Source: CCC analysis, Fourth Carbon Budget Review.
5 The Energy End-Use Simulation Model (ENUSIM) is a technology based, bottom-up industrial energy end-use simulation model which projects the uptake of energy-saving and/
or fuel-switching technologies taking into account the cost effectiveness of technology options under future carbon and fossil fuel prices.
6 Ricardo-AEA (2013) Updating and extending carbon budget trajectories: A review of the evidence. Available at: http://www.theccc.org.uk
7 NERA (2010), Updating Decarbonising Heat: Low -Carbon Heat scenarios for the 2020s, Available at: http://www.theccc.org.uk
8 Cement, ceramics, chemicals, food & drink, glass, iron & steel, oil refining, and paper & pulp.
Chapter 3: Progress reducing emissions from industry 109
1
(b)
Challenges to reduce industry emissions
We set out the main challenges in our 2014 Progress Report. They are worth reiterating:
• Refurbishment cycles. The abatement measures that we have identified for carbon-intensive
industry in the 2020s typically have long lead times. Given the difficulty of retrofitting, and to avoid
missing low-carbon investment opportunities, it is important to prepare abatement in line with
refurbishment cycles.
• Capital constraints. Many of the cost-effective opportunities in energy-intensive industry have
substantial upfront requirements for capital and longer payback periods. For firms to plan and
finance abatement opportunities, there needs to be a mechanism for reflecting the value of carbon
(e.g. a robust carbon price) with long-term certainty to ensure that this investment is prioritised in a
capital-constrained world.
• Infrastructure and markets. Some abatement will need provision of infrastructure or creation
of markets outside the control of specific industries. For instance, to take full advantage of the
potential abatement from industrial CCS, there needs to be adequate CO₂ transport and storage
infrastructure.
Government policy has a role to support industry in meeting these challenges. The ‘2050 Roadmaps’
focused in more depth on these barriers for the eight sectors covered. The next steps will be for
government to work with industry on a series of actions, incentives and mechanisms to overcome
these barriers. The next section assesses progress to date against our policy indicators.
3.
Policy progress
Parsons Brinckerhoff and DNV GL were appointed by the DECC and BIS to produce a set of ‘Industrial
Decarbonisation and Energy Efficiency Roadmaps to 2050’ for eight heat-intensive sectors with a
cross-sector report identifying conclusions that apply across multiple sectors and technology groups.9
The roadmaps, published in March 2015, are based on a collaborative process featuring contributions
from industry sector trade associations, their members, officials from DECC and BIS, and other experts.10
The purpose of each roadmap is to establish decarbonisation pathways that could be possible while
ensuring sectors remain competitive. The pathways give a view of the range of technology mixes that
the sector could deploy over coming decades to enable transition towards a low carbon economy. We
will review the roadmaps’ evidence base and what this means for industry cost-effective abatement
pathway in our Fifth Carbon Budget Advice.
The sector-specific approach to the roadmaps reflects the nature of the challenges and opportunities
for each sector, including the barriers and enabling actions to abatement. Overall, the publication of
these roadmaps is the first step to enable industry sectors to make deeper emissions reductions over
the longer term while staying competitive. We recommended that the UK Government continue to
jointly work with industry to develop and publish a set of plans, setting out specific actions and clear
milestones to move abatement efforts forward along the paths developed.
To encourage the level of private investment in the best equipment currently available and develop
breakthrough technologies needed to implement the roadmaps, a stronger policy framework than
currently exists is required:
9 Cement, ceramics, chemicals, food & drink, glass, iron & steel, oil refining, and paper & pulp. These sectors represent around 70% of manufacturing and refining CO2 emissions.
10 https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-roadmaps-to-2050
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• EU ETS. Total verified emissions have been consistently below the allocation of allowances, largely
because of the recession, causing the market value of carbon to fall and remain at a low level. The
combination of a limited carbon price signal, and uncertainty over the EU ETS in the 2020s mean
the incentives for energy-intensive industries to prepare for and make long-term investments
in line with the fourth carbon budget are weak. Structural reform of the EU ETS is necessary
(Overview Chapter).
• Renewable Heat Incentive (RHI). Industrial uptake of low-carbon heat technologies has been
in line with our indicators (Figure 3.5). However, over the next few years our indicator sets out an
acceleration in low-carbon heat uptake which may be difficult to meet . Funding for the RHI is
only guaranteed to 2016, and funding to 2020 needs to be agreed as soon as possible (Chapter 2).
This is important to achieve supply-chain growth and deliver the increased uptake consistent with
meeting carbon budgets. Beyond 2020, the Government needs to put in place a policy framework
to ensure investment in large scale industrial low-carbon heat projects.
Figure 3.5. Industry low-carbon heat uptake and trajectory (2007-2020)
14
Outturn industry
low-carbon heat
Industry low-carbon
heat indicator
Uptake of low-carbon heat (%)
12
10
8
1
6
4
2
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
0
Source: CCC analysis.
• Promotion of industrial carbon capture and storage (CCS). Industrial CCS is a key technology to
meet the 2050 target:
– The development of CCS infrastructure in the power sector provides an opportunity for colocated industrial plant to be included in a CCS commercialisation strategy across both the
power and industrial sectors (Chapter 1).
– The Teesside Collective has been awarded £1m by DECC to develop a business case, including
potential funding mechanisms, for deploying an industrial cluster CCS development that could
save up to 5 MtCO₂ by the 2020s (Box 3.3).
– Given that CCS is a key technology in industry, the Government needs to develop a joined-up
approach for CO₂ infrastructure and CCS development between power sector projects and
industrial clusters (such as in Teesside) that is compatible with widespread deployment in the
second half of the 2020s.
• Climate Change Agreements (CCAs). Voluntary agreements that allow eligible energy-intensive
sectors to receive up to 90% reduction in the Climate Change Levy (CCL) if they sign up to
government-agreed absolute or relative energy efficiency targets. Since our 2014 Progress Report,
DECC have launched a review of the 2020 targets. We have previously said that the targets are not
Chapter 3: Progress reducing emissions from industry 111
strong enough and we suggest that the review should consider all possible cost-effective energy
efficiency opportunities, tightening targets accordingly. We will report on this review in our 2016
Progress Report.
• Energy Savings Opportunity Scheme (ESOS). Chapter 2 gives an overview of the new ESOS
scheme which has the opportunity to aid in companies identification of further energy efficiencies.
• Combined Heat and Power (CHP). A range of incentives exists to encourage take-up of CHP in
industry. At present, these primarily encourage investment in gas-fired CHP. Due to high efficiencies,
gas CHP does result in some CO₂ emission reductions. However, as grid electricity decarbonises in
the 2020s, these savings will erode. Policy therefore should encourage low-carbon CHP.
• Enhanced Capital Allowances (ECAs). Companies can write off 100% of the cost of new energysaving plant or machinery against business taxable profits in the financial year the purchase
was made. At Budget 2015, the Government announced that it will make a number of changes
to the ECA scheme for energy saving technologies later this year, including adding Waste Heat
Energy Recovery to the scheme. This captures energy from heat that would otherwise be wasted,
improving on-site energy saving and reducing grid electricity consumption.
Based on the slow progress to date, the Government needs to closely monitor uptake of low-cost
measures, commit to long-term funding of existing measures (e.g. RHI), and work with industry to
strengthen incentives for more expensive measures that could significantly decarbonise industrial
sectors to 2030.
Box 3.3. International progress in industrial CCS and the Teesside Collective
Of the 22 CCS projects in operation or under construction across the world, nine are being developed for industrial
sites. Of these, the Emirates Steel plant in Abu Dhabi is the world’s first iron and steel project to apply CCS at large scale.
It moved into construction in the latter part of 2013 and is scheduled to be completed by 2016. In the UK, £1m funding was awarded by the Government to the Teesside Collective, an industrial cluster in the Teesside
area, to develop:
• Feasibility study on CO₂ capture, transport and storage from multiple sources in Teesside (Amec Foster Wheeler).
• Possible investment models and funding mechanisms for industrial CCS in the Teesside cluster (Societe Generale).
• Business case for the project (Pale Blue Dot).
Work on the project has yielded positive results to date. Initial engineering and design work by Amec Foster Wheeler
has found that capturing the carbon from Teesside’s vital industries – hydrogen, ammonia, plastics and steel – is
feasible and cost-effective.
The business case and financing options will be complete by summer 2015, and will provide insight into the required
policy framework structure needed to deploy CCS in industrial clusters. If the Teesside Collective industrial CCS cluster
was established, it would be Europe’s first CCS equipped industrial zone and is estimated to cut CO₂ emissions in the
North East by up to 5 million tonnes a year in the 2020s, with more reductions over time.
A report commissioned from Cambridge Econometrics on economic impacts of the project has concluded that the
project would create a strong incentive for new process plants to re-locate to the Tees Valley and join the CCS network.
This would have a significant impact on local employment and GVA above and beyond the benefit of helping to retain
the existing industrial base.
Notes: More information on the Teesside Collective available at: http://www.teessidecollective.co.uk/
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4.
Industrial competitiveness opportunities and challenges
Decarbonisation raises both challenges and opportunities for UK competitiveness. We have previously
considered how the transition to a low-carbon economy creates opportunities for new businesses, can
save existing businesses money through increased energy- and resource-efficiency and mitigate risks
from fossil fuel prices.
These changes provide economic opportunities for UK manufacturing. Investment in renewables and
energy-efficient technologies will require new infrastructure and equipment for the power sector,
commercial and industrial businesses, and households. That will provide growth opportunities for UK
manufacturing. This potential is not limited to supplying just the UK market. EU members and other
countries, from China to Mexico, are setting challenging emission targets and creating new markets.
In our 2013 Managing competitiveness risks of low-carbon policies report, we highlighted that the UK
has a comparative advantage in some key low-carbon technologies.11 Parts of heavy engineering
and construction, as well some energy-intensive sectors such as parts of chemicals and plastics could
contribute to low-carbon power and heat sector supply chains. Some energy-intensive industries
have already developed new low-carbon technologies and processes which make them well placed
to compete in new markets on the path to a low-carbon world (e.g. low-temperature detergents,
low-resistance tyres and lightweight materials in aircraft and cars). To succeed there will need to be
innovation in new technologies and use of materials, growth of a skilled workforce, supported by a
consistent government policy framework that will help build growth in these supply chains.
Our 2013 report also noted that there are potential competitiveness risks for electro-intensive industries
that are subject to international competition and face higher relative energy costs if other countries are
slower to act on climate change policies than the UK. These firms could see a squeeze on profits which
could potentially drive output and jobs overseas.
While our 2013 assessment of competitiveness risks concluded that low-carbon policies have not
caused any significant industry relocation to date, it is important to ensure that increased energy costs
due to low-carbon policies do not result in offshoring of UK industry. Output moving abroad would
not have any benefits for the UK’s overall carbon footprint (i.e. including consumption emissions) and
therefore global emission reductions, and would not be desirable from a wider economic perspective.
The UK Government has recognised these risks and plans to or already has put in place support
arrangements:
• Compensation for the EU ETS and Carbon Price Floor (CPS)12 impact of rising electricity prices for
electro-intense industries (e.g. iron/steel).
• Compensation for the Renewables Obligation and small-scale Feed-in-Tariff energy bill cost
impacts, from the date of State Aid approval .
• Exemption from the impact of Electricity Market Reform and Contracts for Difference (CfDs) on
electricity prices.
These are due to offset up to around 80% of the costs to support low-carbon electricity sector
investment for those sectors that qualify through to 2019-20.
11 Available at: http://www.theccc.org.uk/
12 Carbon Price Floor (CPF) is minimum a carbon price for fuels, where the Carbon Support Price (CPS) tops up the carbon price from the EU ETS to the CPF.
Chapter 3: Progress reducing emissions from industry 113
1
These measures to alleviate competitiveness risks aim to stop existing energy-intensive sectors
relocating to other countries and to encourage new investment in these sectors. It is important that
competitiveness impacts are closely monitored to ensure there is appropriate support for specific
sectors at risk. The measures should also be transitional on the path to a global climate change deal
which would, over time, ensure a level playing field and reduce the need for support.
By the end of 2016, the Government should evaluate the impact of the compensation measures to
date, assess whether these are addressing sectors at risk effectively, and assess what compensation
may be needed post-2020. The Government should consider, as part of the evaluation, whether these
measures should be further targeted to help industry invest in reducing its emissions.
5.
Forward look
In our Fourth Carbon Budget Review, we suggested that direct industry emissions could fall to 84 MtCO₂
in 2025 to meet carbon budgets (Figure 3.6). According to DECC’s Energy and Emissions Projections (EEP),
industry direct emissions in the absence of policy would be 101 MtCO₂ in 2025, falling to 99 MtCO₂
when estimated savings of current and planned government policies are included.
This leaves a gap of around 15 MtCO₂ in 2025 which needs to be addressed to stay on the costeffective path we have identified to meet carbon budgets. This gap comprises uptake of low-carbon
heat (9 MtCO₂), further options in energy-intensive sectors (5 MtCO₂) and initial deployment of
industrial CCS (1 MtCO2).
Not all policy savings are necessarily assured. We have assessed the risk associated with the policies
in DECC’s projections. While 0.4 MtCO₂ is to be delivered by lower-risk policies, 2.5 MtCO₂ savings are
dependent on policies with design/delivery problems or which are currently underfunded (Table 3.2).
We have identified three key areas where there is a lack of policy – low-carbon heat (post 2020),
further options for energy-intensive sectors and industrial CCS. The Government’s industrial roadmaps
project was an important first step towards identifying barriers to unlocking cost-effective abatement
potential, but these now need to be translated into a delivery plan for an industrial low-carbon policy
framework strong enough to support the level of investment required.
Figure 3.6. DECC industry emission projection risk assessment (2010-2027, MtCO2)
140
Lower-risk policies
At-risk policies
Policy gap
Baseline admissions
Cost-effective path
Outturn
120
MtCO2e
100
80
60
40
20
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
0
Source: NAEI GHG inventory, DECC EEP 2014, CCC analysis.
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Table 3.2. DECC Industry emission projection risk assessment
Policies
DECC estimated
abatement in 2025
Low risk
• RHI to April 2016
0.4 MtCO₂
At risk policies
• EU Products policy tranche 1 & 2
2.5 MtCO₂
• Building regulations part L 2010 & 2013
• RHI from April 2016
• ESOS
• Private Rented Sector Regulations
Source: DECC EEP 2014 CCC analysis
Notes: See Technical Annex 3 for more details.
6.Summary
To realise industry’s significant abatement potential, it is necessary to support the growing low-carbon
sectors of the economy and ensure those sectors at risk remain competitive while they decarbonise.
Many large investment decisions taken by the private sector are made at a strategic level and for
these to go ahead, there needs to be confidence in a long-term industrial abatement plan. From our
analysis of the current policy framework for industry, there are significant gaps to realise cost-effective
abatement within industry.
To bridge the gap requires action in three key areas:
• Low-carbon investment. For the abatement potential to be realised this will require continued
investment in new plant and equipment through to 2050. For the private sector to invest, there
needs to be confidence in the right policy framework in place to incentivise large-scale projects.
The results of the Teeside Collective study will set out possible funding mechanism options for
investment in the industrial CCS cluster, ‘2050 Roadmaps’ action plans should focus on how to
overcome investment barriers and the Government should to consider if there needs to be a
change in large scale low-carbon heat project incentivisation.
• Developing future options and innovation. The ‘2050 Roadmaps’ and other forward looking
analysis have highlighted the potential for significant abatement of emissions from breakthrough
technologies and processes that are currently not fully developed, such as industrial CCS.
Investment in innovation is needed to ensure that these technologies and processes are ready
for commercialisation in line with refurbishment cycles in industry. To support this, sectors need
access to innovation funds in the UK and across the EU, such as Horizon 2020 and NER 300, with
government assistance on how to secure funding from these programmes for the development of
these new technologies.
• Low-carbon choices. Discussions with those working within industry and evidence from the ‘2050
Roadmaps’ projects suggest that energy efficiency and other abatement opportunities are not
generally high up on the corporate agenda. It is important that industry takes a long-term and
strategic lead on how to compete in a carbon constrained world. It is equally important that the UK
Government ensures that there is a long-term and credible policy framework that supports sectors
at risk of competition and rewards real action.
Chapter 3: Progress reducing emissions from industry 115
1
Transforming UK industry through energy efficiency and the decarbonisation of their its supply will
require long-term policy commitments from the Government. There are significant challenges to
industrial decarbonisation, including development of breakthrough technologies, large capital outlays,
refurbishment cycles and issues with international competition. However, a low-carbon industrial
sector will benefit in the long-term from lower energy costs and an opportunity to supply new
industrial materials and products to a low-carbon global market. It is essential that the Government
takes a leadership role in working with industry to create action plans with real commitments and
milestones to monitor progress.
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1
Chapter 3: Progress reducing emissions from industry 117
Chapter 4: Progress reducing
transport emissions
1. Trends in transport emissions
2. Progress in reducing emissions
from surface transport
3. Progress in changing travel
behaviour
4. Progress in reducing emissions
from aviation and shipping
5. Forward look
6. Summary
Key messages and recommendations
Domestic transport accounted for 22% of total UK greenhouse gas emissions in 2014. Transport
emissions fell between 2009 and 2013 but increased in 2014. With travel demand increasing, there
is a need to decarbonise transport more rapidly to meet future carbon budgets. There is significant
potential to reduce emissions through further efficiency improvements in conventional vehicles,
switching to ultra-low emission vehicles (ULEVs), and changing travel behaviour.
The key messages from this chapter are:
• Emissions trends: In 2014 transport sector emissions increased by 1.1%, a reversal of recent trends.
Between 2009 and 2013 transport emissions fell by 1.1% on an average annual basis. Road travel
demand is increasing across all modes. There were continued improvements in the efficiency of
new cars but slower improvements for vans and heavy goods vehicles (HGVs).
• New vehicle CO2: New car and van CO2 intensity has continued to improve and is broadly in line
with our indicator, but there is growing evidence that the gap between test-cycle and real-world
emissions has widened. There has been little progress in agreeing post-2020 EU targets for new
cars and vans or in developing regulation for CO2 from new HGVs.
• Electric vehicles: There has been strong growth in UK electric vehicle (EV) sales, which more than
quadrupled in 2014, significantly outperforming our indicator. The number of models available
has also increased in the last year.
1
• Biofuels: Penetration of biofuels increased from 2.9% by energy in 2013 to 3.2% in 2014 but
remains below our indicator. Sustainability continues to improve, with average GHG savings of
69% for biofuels delivered in 2013/14 and almost half of biofuels derived from waste.
• Travel demand: There has been less progress in reducing travel demand. Whilst there was a small
increase in the number of projects funded by the Local Sustainable Transport Fund, it has not
been extended beyond 2015/16 and evidence of the CO2 impact of the schemes remains weak.
• Forward look: Emissions reductions from announced policies are estimated to fall short of our
indicator by around 17 MtCO2 in 2025.
As well as cutting CO2 emissions, many of the measures covered in this chapter could have
additional co-benefits, such as improving air quality, boosting UK manufacturing and improving
public health.
Our key policy recommendations are:
• Provide motor industry with greater certainty to 2030: Push for clear, stretching 2030 EU targets
for new cars and vans that take account of the need for ultra-low emission vehicles and use
realistic testing procedures.
• Tackle barriers to EV uptake: Maintain support for upfront costs while they remain more
expensive than conventional vehicles, provide a national network of charge points and roll out
local incentives such as access to parking.
• Ensure the tax regime keeps pace with technological change: Align existing fiscal levers
(e.g. Vehicle Excise Duty) to ongoing improvements in new vehicle CO2, including a greater
differentiation between rates for high and low emission vehicles.
Chapter 4: Progress reducing transport emissions 119
Key messages and recommendations
• Extend successful emissions-reduction schemes for freight operations: Larger freight
operators have pioneered schemes to reduce fuel costs and emissions that should be rolled out
across the industry, including small operators.
• Ensure lessons from schemes to reduce travel demand are applied: Sustainable travel schemes
should be properly evaluated and extended if they provide cost-effective emissions reductions.
• Publish an effective policy framework for aviation emissions: Plan for UK 2050 emissions at
2005 levels (implying around a 60% increase in demand) and push for strong international and
EU policies.
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1. Trends in transport emissions
UK domestic transport CO2 emissions for 2014 are provisionally estimated to be 117 MtCO2 (28% of
UK CO2 emissions)1. This represents an increase of 1.1% from 2013, compared with an average annual
decrease in emissions of 1.1% between 2009 and 2013 (Figure 4.1).
Figure 4.1. Total transport CO2 emissions to 2014
160
140
120
MtCO2
100
80
60
40
20
2014
(p)
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
1
Source: NAEI (2015), DECC provisional estimates.
Note: p=provisional.
More detailed data on domestic transport emissions are now available for 2013, providing splits
between emissions from different greenhouse gases (GHGs) and from different modes of transport.
• In 2013, CO2 emissions accounted for 99% of transport GHG emissions2.
• Surface transport accounted for 95% of domestic transport emissions, the remaining 5% being due
to domestic aviation and shipping.
Surface transport emissions
(a) Economic context
Historically, demand for road transport has been largely driven by changes in GDP, population
and motoring costs, although demand for freight transport has been more closely related to
manufacturing output than GDP3. Whilst manufacturing output fell in 2013, all other key drivers moved
to increase demand for road transport. This trend accelerated in 2014, with strong growth in GDP and
manufacturing output alongside lower motoring costs, largely driven by the falling oil price (Figure 4.2).
1
2
3
All outturn emissions data are based on the National Atmospheric Emissions Inventory (NAEI). Available at: www.gov.uk/.
This chapter focuses on CO2 emissions.
DfT (2015) Road Traffic Forecasts 2015. Available at: www.gov.uk/.
Chapter 4: Progress reducing transport emissions 121
Figure 4.2. Key Economic Indicators
3.5
2013-2014
3.0
2012-2013
Percentage change
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
GDP
Population
projections
Motoring
costs
Manufacturing
output
Source: CCC calculations based on Office for National Statistics data and DfT (2014) Transport Statistics Great Britain.
Whilst these economic drivers continue to play an important role in determining demand for travel,
there is some evidence that the relationships have weakened in recent years. Understanding these
drivers in more detail will help to improve the Government’s forecasts of travel demand, which inform
the required scale of future emissions reductions (Box 4.1).
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Box 4.1. Forecasts of travel demand
Government forecasts of demand for travel are produced using the National Transport Model (NTM). These forecasts
are used to help inform the required scale of future emissions reductions and also to inform decisions on the
level of investment needed in the road network. Our work draws on these forecasts but we continually review
their performance against outturn data to ensure that our emissions projections are based on robust projections
of demand.
There is some evidence that demand for car travel has been slowing since the early 2000s. To investigate this trend,
DfT recently carried out a review of evidence of the drivers of demand for car travel4. The report demonstrates diverse
trends for different road types, different groups of people and in different locations. The relationships between drivers
of demand are found to be complex and interacting. For example, divergent trends between different age and gender
groups are partially explained by differences in income, but it is also possible that cultural and generational differences
have played a role. Uncertainty around the extent to which these factors will continue to be important makes it
difficult to accurately project future demand.
To address this DfT has included two additional scenarios in its road traffic forecasts. (Figure B4.1), whilst continuing to
include scenarios that demonstrate sensitivity to future GDP and fuel prices.
Though recent work has focused on car travel, DfT has recognised the need to improve its forecasts of demand for van
and HGV travel. Our analysis suggests that some emerging trends, such as the rapid increase in van demand, are not
fully reflected in DfT forecasts (Section d).
DfT will be carrying out more work to improve the evidence base and refine forecasts. We will monitor these
developments closely and consider the implications for future carbon budgets.
1
Figure B4.1. Forecasts of demand for travel
800
Scenario 1 – Historic
income relationship
+ flat trip rates
Scenario 2 – No
income relationship
+ flat trip rates
Scenario 3 – Historic
income relationship
+ extrapolated trip rates
700
Billion vehicle-km
600
500
400
300
200
100
0
2010
2015
2020
2025
2030
2035
2040
Source: DfT (2015) Road Traffic Forecasts.
4
DfT (2015) Understanding the drivers of road travel: current trends in and factors behind roads use. Available at: www.gov.uk/.
Chapter 4: Progress reducing transport emissions 123
(b) Emissions trends
Within surface transport 98% of emissions come from road transport, with the remainder coming from
rail and various non-road transport vehicles (Figure 4.3).
Figure 4.3. Surface transport CO2 emissions by mode in 2013
Rail
Buses 2%
4%
Other
1%
Total emissions
109 MtCO2
Vans
14%
Cars
57%
HGVs
22%
Source: NAEI (2015).
Note: ‘Other’ includes motorcycles and mopeds, liquefied petroleum gas emissions (all vehicles), aircraft support vehicles and other road vehicle engines.
Road transport emissions decreased by 1.1% in 2013, as against a 2.5% reduction in our cost-effective
path (Figure 4.4).
Figure 4.4. Total road transport CO2 emissions against CCC indicator (2003-2013)
140
Outurn
Indicator
120
MtCO2
100
80
60
40
20
2027
2025
2023
2021
2019
2017
2015
2013
2011
2009
2007
2005
2003
0
Source: NAEI (2015), CCC modelling.
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Official data are not yet available for road transport emissions in 2014, but it is possible to estimate
emissions using data on sales of petrol and diesel. These data suggest that road transport emissions
may have increased by over 1% in 2014, compared to a decrease of around 3.7% under our costeffective path.
We now examine the three most significant sources of surface transport emissions; cars, vans
and HGVs. Other modes are considered in the Technical Annex (Technical Annex 4 -Transport).
(c) Car emissions
Car emissions fell by 2.1% in 2013 to 62 MtCO2, in line with our indicator. This compares with an average
annual reduction of 2.5% between 2009 and 2013. The main reason for the decrease in emissions was
a fall in CO2 intensity of the car fleet as the distance travelled by cars (car-km) remained broadly flat
(Figure 4.5):
• In 2013 car-km were roughly flat, falling just below our indicator, but increased by 1.5% in 2014.
Economic factors may not fully explain these changes.
– GDP, population and real car costs per km, have all moved to increase car-km. Using DfT’s
estimated elasticities for these drivers5, we would expect demand for car travel to have increased
by 4.9% between 2012 and 2014, compared to the outturn increase of 1.4% (Technical Annex 4 –
Transport).
– This estimate should be treated with caution as the elasticities are not designed to capture
changes in demand over short time intervals and the discrepancy could be within the margin of
modelling error.
– However, it is also possible that this difference could indicate a weakening of the relationship
between these economic drivers and demand for car travel.
• Data on emissions and car-km imply that average car CO2 intensity fell by 2.0% in 2013, compared to
a 3.8% decrease in our indicator. Although there was higher fuel efficiency as a result of reductions
in new car CO2, there was a lower than expected increase in biofuel penetration and a residual
impact of slow stock turnover during the recession6 (Table 4.1).
Table 4.1. Drivers of car CO2 intensity
Driver
Biofuels
New cars in 2013
Stock turnover
Change in 2013
Percentage
point (pp)
contribution
Biofuel penetration by energy increased from 2.9% to 3.3%
-0.3pp
The CO2 intensity of new cars fell by 3.6%
-0.2pp
The CO2 intensity of existing fleet fell by 1.9%7
-1.6pp
Source: CCC calculations based on data from NAEI, the HMRC Hydrocarbon Oils Bulletin and SMMT.
Data for car emissions in 2014 are not yet available but we can make an estimate based on provisional
data for distance travelled, biofuels penetration and new car CO2.
• Car-km increased by 1.5% in 2014.
• Biofuel penetration in the car fleet increased from 3.3% to around 3.5%.
5
6
7
DfT (2013) Road Traffic Forecasts 2013. Available at: www.gov.uk/.
Turnover of cars has slowed in recent years and the average age of the fleet has increased in every year since 2009 (7.9 years in 2014, compared to 7.1 years in 2009). However,
there are signs this trend is reversing, with sales of new cars increasing by 9% in 2014.
Due to older vehicle leaving the fleet.
Chapter 4: Progress reducing transport emissions 125
1
• New car CO2 intensity decreased by 2.8%, which implies that the intensity of the fleet fell by around
1.9% when stock turnover is taken into account.
• Together these data suggest that car emissions are likely to have fallen by less than 1% in 2014,
though this should be treated with caution given the uncertainties in the data.
Figure 4.5. Car emissions to 2013/Car-km to 2014/Car CO2 intensity to 2013 against CCC indicator
70
MtCO2
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
60
50
40
30
20
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
0
2003
10
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Outturn
Indicator
2004
200
180
160
140
120
100
80
60
40
20
0
80
2003
gCO2/km
Billion vehicle-km
450
400
350
300
250
200
150
100
50
0
Source: NAEI (2015), DfT (2015) Road Traffic Statistics.
(d) Van emissions
Van emissions increased by 2.7% in 2013 to 16 MtCO2, as against a decrease of over 2% on our costeffective path. This is stronger growth than in recent years, with van emissions increasing by 1.4% on
an average annual basis between 2009 and 2013. The 2013 increase was largely a result of continued
strong growth in demand, partially offset by a fall in fleet CO2 intensity (Figure 4.6).
• Van-km increased by 3.2% in 2013 and by 5.8% in 2014. Changes in GDP, population and fuel costs
together with estimated elasticities suggest that van-km might have been expected to increase by
around 6.4% between 2012 and 2014, compared to the actual increase of 9.2%. The rapid increase in
van-km is not fully understood, but the continued increase in deliveries of online sales and a rise in
the number of self-employed tradespeople may be contributing factors8.
• Combining data on emissions and van travel demand shows that average CO2 intensity of the van
fleet decreased by 0.5% in 2013, compared with a 5.7% decrease in our indicator. It is not possible
to accurately attribute the change in CO2 intensity to different factors, due to a lack of historical
data, but changes in biofuels penetration, new van CO2 and stock turnover will have played a role
(Table 4.2).
8
126
DfT recently commissioned a research project into trends in demand for van travel, due to be published later this year.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Table 4.2. Drivers of van CO2 intensity
Driver
Change in 2013
Biofuels
Biofuel penetration by energy increased from 2.4% to 2.8%
New vans in 2013
The CO2 intensity of new vans fell by 2.0%
Stock turnover
The average age of vans increased by 0.2 years9.
Source: CCC calculations based on data from NAEI, the HMRC Hydrocarbon Oils Bulletin and SMMT.
We do not have data on van emissions in 2014 but it is likely that they increased, with higher van-km
outweighing improvements in van emissions intensity. We will continue to monitor this trend and if it
poses a risk to meeting carbon budgets we will advise DfT to take appropriate action.
Figure 4.6. Van emissions to 2013/Van-km to 2014/Van CO2 intensity to 2013 against CCC indicator
80
70
Billion vehicle-km
60
50
40
30
2014
2013
2012
2011
2010
2009
2008
2007
150
2006
200
2005
gCO2/km
250
1
2004
300
MtCO2
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
0
2003
10
18
16
14
12
10
8
6
4
2
0
2003
20
100
50
Outturn
Indicator
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0
Source: NAEI (2015), DfT (2015) Road Traffic Statistics.
(e) HGV emissions
HGV emissions were 24 MtCO2 in 2013, broadly unchanged from the previous year and above the level
suggested by our cost-effective path. There was an increase in HGV-km, offset by a reduction in the
emissions intensity of the fleet (Figure 4.7).
• HGV-km increased by 0.8% in 2013 and by 2.4% in 2014. Given economic outturn data and
estimated elasticities we might have expected HGV-km to increase by 2.3% between 2012 and 2014,
as against the actual increase of 3.2%.
• There is uncertainty surrounding emissions from HGVs and their CO2 intensity. In our 2014 Progress
Report, we identified issues with the NAEI methodology for calculating emissions from HGVs that
suggested a large range of uncertainty around these estimates (Technical Annex 4 – Transport).
Consequently, we have decided not to track progress against our indicator for CO2 intensity until
these estimation issues can be resolved.
9
The average age of vans increased by 0.2 years per year between 2009 and 2013, but the increase is beginning to slow (up 0.1 years in 2014).
Chapter 4: Progress reducing transport emissions 127
• HGV CO2 intensity will have been affected by biofuel penetration and fleet turnover, but changes in
the way HGVs are operated may also be having an impact on their emissions per kilometre.
– The percentage of biofuels in HGV fuel increased from 2.3% to 2.7% by energy in 2013.
– Turnover of HGVs slowed over the last 5 years, with the average age of HGVs increasing by
0.1 years per year between 2009 and 2013. This trend appears to be continuing, with a similar
increase in average age in 2014.
– The CO2 intensity of HGV operations can also be expressed in terms of emissions per tonnekilometre. An HGV that is fully loaded will have higher emissions per kilometre, but will usually
have lower emissions per tonne-kilometre compared to a half-full HGV. Our analysis suggests
that while emissions per kilometre increased by nearly 9% between 2009 and 2013, emissions
per-tonne-kilometre decreased by about 6%. This is likely to have been driven by a significant
shift to heavier vehicles, but other factors may have contributed (Technical Annex 4 – Transport).
We do not have data for HGV emissions in 2014 but it is likely that HGV emissions increased due to
rising freight demand.
Figure 4.7. HGV emissions to 2013/HGV-km to 2014/HGV CO2 intensity to 2013 against CCC indicator
35
Billion vehicle-km
30
25
20
15
1000
900
800
700
600
500
400
300
200
100
0
20
MtCO2
2014
2013
2012
2011
2010
2009
2008
2007
2006
25
15
10
5
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2003
gCO2/km
0
2004
0
2005
5
2004
30
2003
10
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Outturn
Indicator
Source: NAEI (2015), DfT (2015) Road Traffic Statistics.
128
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Emissions from aviation and shipping
(a) Aviation
Total UK aviation emissions were 34 MtCO2 in 2013, a reduction of 0.6% on 2012. This is in line with the
trend in recent years, where aviation emissions fell by 0.7% on an average annual basis between 2009
and 2013 (Figure 4.8). Both domestic and international emissions fell in 2013.
• Domestic emissions fell 1.1% in 2013 to 1.8 MtCO2.
• International emissions (which are not formally included in carbon budgets) fell 0.6% in 2013 to 32
MtCO2.
Figure 4.8. UK aviation CO2 emissions (1990-2013)
International aviation
Domestic aviation
40
35
30
MtCO2
25
20
15
10
2013
2011
2012
2010
2009
2008
2007
2006
2005
2004
2003
2001
2002
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
1990
5
Source: DECC (2015).
Passenger numbers and flights increased in 2013 by 3.5% and 0.8% respectively. This suggests the
reduction in emissions in 2013 was due to changes on the supply side (e.g. increases in load factor,
improved fuel efficiency) and/or a shift in the route mix towards closer destinations.
A further set of tracking and monitoring indicators for aviation can be found in the Technical Annex
(Technical Annex 4 – Transport).
(b) Shipping
Emissions from UK shipping were 11 MtCO2 in 2013, a reduction of 2.9% on 2012. Whilst there is some
volatility in year-on-year changes in shipping emissions this is in line with the trend in recent years,
where shipping emissions fell by 5.1% on an average annual basis between 2009 and 2013 (Figure 4.9).
Both domestic and international shipping emissions fell in 2013.
• Domestic shipping emissions fell 4.4% in 2013 to 2.2 MtCO2
• International shipping emissions (which are not formally included in carbon budgets) fell 2.5% in
2013 to 8.7 MtCO2.
Chapter 4: Progress reducing transport emissions 129
Figure 4.9. UK shipping CO2 emissions (1990-2013)
16
International shipping
Domestic shipping
14
12
MtCO2
10
8
6
4
2013
2011
2012
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1991
1990
0
1992
2
Source: DECC (2015).
Total demand for UK shipping (as measured in tonne-km) increased by 3.8% in 2013. However, the
number and average size of ships using UK ports fell (by 2.1% and 1.8% respectively), suggesting the
reduction in emissions in 2013 was due to changes on the supply side. Factors that may have reduced
reported UK shipping emissions include falling ship speeds, improvements in fuel efficiency of ships,
and changes in bunkering patterns.
A further set of tracking and monitoring indicators for shipping can be found in the Technical Annex
(Technical Annex 4 – Transport).
2. Progress in reducing emissions from surface transport
Progress in improving new vehicle emissions intensity
(a) Cars and vans – Progress to date
EU regulations on average CO2 intensity have been in place for new cars since 2009 and for new vans
since 2011. For cars, there are targets in place for 2015 (130 gCO2/km) and 2020/21 (95 gCO2/km)10. For
vans, the targets are for 2017 (175 gCO2/km) and 2020 (147 gCO2/km). The regulations apply to the
average of a manufacturer’s fleet of new cars and vans sold in the respective year.
The EU regulations have been effective in delivering test-cycle emissions reductions. In 2014, new car
CO2 fell by 2.8% to 124.7g CO2/km and new van CO2 fell by 2.0% to 181.9gCO2/km. For both cars (Figure
4.10) and vans this is a slight underperformance against our indicator.
10
130
The regulation will be phased in over one year, with 95% of sales counting towards the target in 2020, before rising to 100% in 2021.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Figure 4.10. New car CO2 against CCC indicator
200
Actual
180
Indicator
160
gCO2/km
140
120
100
80
60
40
20
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: SMMT (2015), CCC Modelling.
Sales data suggest that emissions reductions have been driven largely by the supply of more efficient
cars as manufacturers work towards EU targets, while the impact of consumer purchase decisions on
CO2 reduction has remained broadly neutral in the last few years.
• Sales by car size remain polarised, towards smaller and larger car segments, but the share of sales
across different segments did not change significantly between 2013 and 2014 (Figure 4.11).
• The share of sales for petrol and diesel fuelled cars has remained broadly unchanged at 50% for
each in 2013 and 2014.
More detailed analysis of CO2 intensity for different types of car is available in the Technical Annex
(Technical Annex 4 – Transport).
Figure 4.11. New car sales by segment
40%
2011
35%
2012
2013
Share of sales (%)
30%
2014
25%
20%
15%
10%
5%
MRV
Dual purpose
Sports
Luxury
Executive
Upper medium
Lower medium
Supermini
Mini
0%
Source: SMMT (2015)
Chapter 4: Progress reducing transport emissions 131
1
A recent evaluation11 of the new car and van CO2 regulations carried out for the European Commission
suggests they have been more cost-effective than initially anticipated:
• It is estimated that there has been a net benefit to society of €100 for every tonne of CO2 abated
since the regulations were introduced.
• The costs of fuel saving technology have been lower than initially anticipated (around €200 per
vehicle compared to initial estimate of around €620 per vehicle). In addition, fuel prices were higher
than initial projections, which meant that the regulations brought about bigger savings.
Later in 2015, the European Commission will be publishing an assessment of the cost-effectiveness of
technologies that could be deployed to meet future targets.
Whilst reductions in test-cycle emissions are positive, there is evidence of a growing gap between
test-cycle emissions and those achieved in real-world driving conditions, implying smaller reductions in
gCO2/km on the road (Box 4.2).
11
132
Ricardo-AEA (2015). Available at: http://ec.europa.eu/clima/events/docs/0103/evaluation_en.pdf.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Box 4.2. The impact of the car and van test-cycle on real-world emissions
Since the 1990s, CO2 emissions from new vehicles sold in the EU have been tested using the New European Driving
Cycle (NEDC). Vehicle emissions are determined by a wide range of factors, including driving speed, vehicle loading
and use of auxiliary systems (e.g. air conditioning). The NEDC does not fully account for these factors, which means that
a vehicle’s measured CO2 intensity is considered to be only a loose proxy for the real-world value.
Carbon budgets need to be set on the basis of real-world emissions. Therefore, when estimating the future emissions
of the UK vehicle fleet, it is necessary to account for these additional factors, in the form of an “emissions gap” between
the regulated target for new vehicles and average real-world emissions.
Recent studies12 have suggested that this emissions gap is significant and growing. Average real-world emissions
intensity of new cars in 2013 may have been around 38% higher than the average NEDC value (Figure B4.2). Reliance
on an increasingly inaccurate test as the main policy instrument to decarbonise vehicles could present a problem for
climate change mitigation efforts. It also results in higher real-world fuel consumption than implied by the NEDC label.
For the average new car driver in 2013, this could mean annual fuel costs over £350 higher than those advertised.13
The EU has recognised the problem of the growing emissions gap and has proposed that it is addressed by the
introduction of the Worldwide harmonized Light vehicles Test Procedure (WLTP). This test will be more representative
of real-world driving and is expected to close some of the loopholes that manufacturers have been able to exploit in
the NEDC. However, the WLTP may not entirely close the gap.14
We have commissioned a research project to look at the historical relationship between NEDC and UK CO2 emissions to
assess whether total emissions have been higher than expected, given the improved performance of vehicles on the
test-cycle in recent years. The project will then assess the extent to which this might continue to be the case in future,
given the proposed introduction of WLTP in 2017. This analysis will be used to monitor the future emissions gap and
whether additional effort will be needed to meet climate change mitigation targets.
Figure B4.2. Gap between real-world and test-cycle emissions
40%
30%
25%
20%
15%
10%
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0%
2002
5%
2001
Gap between real-world and
test-cycle emissions
35%
Source: ICCT (2014) From laboratory to road: A 2014 update.
12
13
14
ICCT (2014) From laboratory to road: A 2014 update. Available at: http://www.theicct.org/laboratory-road-2014-update
The average car drove around 13,000 kilometres in 2013 (based on data from DfT’s National Travel Survey). The average pump fuel price was around 140 pence per litre in 2013
(based on data from DECC Quarterly Energy Price Statistics).
Emissions Analytics (2014). Available at: http://emissionsanalytics.com/real-driving-emissions-are-you-ready/
Chapter 4: Progress reducing transport emissions 133
1
(b) Cars and vans – Forward look
Regulation to 2020
New car CO2 intensity will need to fall at an average annual rate of 4.4% between now and 2020 to
reach an average of 95 gCO2/km in the UK, compared to an average annual rate of 3.6% since 2009. To
meet the 2020 target for vans, CO2 intensity will need to fall at an average annual rate of 3.5%. Evidence
suggests that manufacturers could meet the targets.
• Progress to date is ahead of schedule, with both new car and new van CO2 outperforming
trajectories to the 2015 and 2017 targets15.
• There are stiff penalties for failure to comply with the targets16, while additional manufacturing costs
associated with meeting them appear to be lower than previously estimated (as discussed above).
• For the largest car manufacturers, the rate of progress required to meet their 2020/21 targets is
generally lower than the rates of reductions achieved since 200917.
As noted above, the introduction of the new WLTP test-cycle provisionally agreed for 2017 should
ensure a closer match between test-cycle and real-world emissions. Beyond 2020, new car and van
CO2 targets will be set using the WLTP. The gap between WLTP and real-world emissions should be
monitored to check that the targets are realising the intended level of emissions reduction.
Post-2020 regulation
The European Commission is in the process of developing post-2020 targets for new car and van CO2,
with detailed announcements expected no earlier than 2016. It is likely that emissions reductions to
2020 will be delivered mainly through continuing efficiency improvements in conventional vehicles.
Beyond 2020, take-up of electric and other ultra-low emission vehicles will be increasingly important to
reduce emissions.
• Our analysis has identified scope to reduce test-cycle CO2 intensity to 80 gCO2/km for conventional
cars and 120 gCO2/km for conventional vans by 203018.
• These conventional efficiency improvements together with penetration of electric vehicles could
result in average test-cycle emissions in 2030 of 50 gCO2/km for new cars and 60 gCO2/km for new
vans.
The market for cars and vans is Europe-wide. To achieve this progress it is important that the UK
pushes for stretching EU targets for new car and van emissions in 2030. Moreover, in deciding what
level of target to support, it is important to recognise not only the scope for efficiency improvement in
conventional vehicles, but also the need to achieve increasing penetration of electric and other ultralow emission vehicles through the 2020s.
15
16
17
18
134
The target trajectories imply slower improvements to 2015/17, with the rate of improvement accelerating to 2020. The CCC trajectory assumes that improvements will be made at
a more consistent rate all the way to 2020, which is why new car and van CO2 is outperforming the target trajectory but slightly underperforming against the CCC trajectory.
Penalties are currently €5 for exceeding the first g/km, €15 for the second g/km, €25 for the third g/km, and €95 for each subsequent g/km. From 2019, the cost will be €95 from
the first gram onwards.
Ricardo-AEA (2015). Available at: http://ec.europa.eu/clima/events/docs/0103/evaluation_en.pdf.
CCC (2013) Fourth Carbon Budget Review – Technical report. Available at: www.theccc.org.uk/.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Fiscal levers
As outlined in our 2014 Progress Report, member states with strong national policies complementing
EU regulations have achieved greater improvements in average vehicle efficiency19. The UK has a
number of fiscal policies in place aimed at encouraging purchase of more efficient vehicles:
• Vehicle Excise Duty (VED): Since 2001 VED rates have been differentiated according to CO2
emissions (gCO2/km). Currently, there are no bands below 100 gCO2/km, which means it provides
no additional incentive to purchase a ULEV. In order to promote uptake of ULEVs, VED should be
graduated below 100 gCO2/km giving preference to zero emission vehicles, take account of the
95 gCO2/km EU target for conventional vehicles and have stronger differentiation between bands,
including increased rates for higher emission bands.
• Company Car Tax (CCT): CCT provides an incentive to purchase a ULEV, with five differentiated rates
below 100 gCO2/km, including a band for zero emission vehicles. Rates have been announced out
to 2020 and are set to gradually increase for lower emitting vehicles.
• Enhanced Capital Allowance (ECA): Firms are able to claim an ECA on new vehicles below 75
gCO2/km until 2018. This policy has not been extended to rental and hire companies (including car
clubs) or to second hand vehicles.
While CCT provides differentiated incentives for the lowest emitting vehicles, VED offers no additional
incentive to purchase a car below 100gCO2/km. We recommend that all fiscal levers should be
adjusted over time to align to new vehicle CO2 targets, providing additional incentives for ULEVs and
higher rates for higher emitting vehicles.
Policies to improve local air quality
Whilst the policies covered in this chapter focus on reducing carbon emissions, they have important
implications for efforts to reduce air pollutant emissions from vehicles and improve local air quality. In
recent years, decisions to switch from petrol to diesel have reduced CO2 emissions, whilst increasing
air pollutant emissions. In future, an emphasis on reducing demand for car travel in urban areas and
moving to ULEVs will help to achieve both objectives simultaneously (Box 4.3).
19
CCC (2014) Meeting Carbon Budgets – 2014 Progress Report to Parliament. Available at: www.theccc.org.uk/.
Chapter 4: Progress reducing transport emissions 135
1
Box 4.3. Air quality and climate change
Vehicles
Reducing emissions of air pollutants and CO2 can often be achieved in tandem, but historically some measures have
acted to reduce one at the expense of the other.
New cars and vans are subject to increasingly strict EU standards for both CO2 emissions and emissions of air pollutants,
such as NOx and particulates. Diesel cars typically have lower CO2 emissions than their petrol equivalents, but their air
pollution emissions can be higher. As with the CO2 regulations, the effectiveness of the technology used to clean the
exhaust fumes is checked using a test-cycle, which is not currently representative of real-world driving. This has led to
higher real-world emissions of air pollutants than the legislation intended, particularly for diesel vehicles. At the same time,
policies such as VED, which are based on CO2 emissions, could have incentivised the uptake of diesel cars in recent years.
From September 2015, new diesel cars will meet the Euro 6 standard, which has been found to be relatively successful
in reducing particulate and NOx emissions20. This suggests that it is possible for manufacturers to reduce emission of
both CO2 and air pollutants, but that a stringent testing regime is required to achieve both objectives under real-world
conditions.
To meet carbon budgets in 2030 and beyond, there will be a shift away from both petrol and diesel towards ULEVs,
which produce little or no air pollution.
Local air quality policies
Whilst there have been improvements in vehicle technology, air quality remains an urgent problem in some areas
of the UK. Several cities and regions in the UK, including London, Birmingham and Glasgow have been in breach of
European air quality directives designed to protect public health. In April 2015, the European Court ordered the UK
Government to provide updated plans to reduce emissions to legal limits as soon as possible. These plans must be
produced by the end of 2015.
Some of these areas are already implementing measures to improve local air quality. These measures can have
additional CO2 benefits and promote the uptake and raise awareness of electric vehicles. For example, London is
implementing an Ultra-Low Emission Zone (ULEZ), which will come into operation in 2020. This involves a number
of measures to improve local air quality, such as charging higher emitting cars to enter central London and replacing
fleets of buses and taxis with hybrid and electric alternatives. Such schemes also play an important role in changing
travel behaviour, by encouraging people to choose public transport, cycling or walking over travelling by car.
(c) HGVs – Progress to date
New HGVs are subject to Euro standards, which place mandatory limits on emissions of air pollutants.
Their CO2 emissions, however, are not subject to EU regulation. There is some evidence that the fuel
efficiency of new HGVs has remained static throughout the last decade as more stringent limits for
NOx and particulate matter (PM) emissions have dominated research and development effort and, in
some cases, lead to increased fuel consumption21.
(d) HGVs – Forward look
Our cost-effective path suggests that there is potential for new HGV CO2 intensity to fall by around
30% between 2010 and 2030. However, stronger policy is likely to be required to achieve this level
of improvement. Last year, the European Commission published a strategy to reduce CO2 emissions
from HGVs (and other heavy duty vehicles). The strategy set out short-term measures to improve
the monitoring and reporting of HGV emissions as well as longer-term options for delivering deeper
emissions reductions:
• Direct measurement of whole-vehicle emissions is not appropriate for HGVs, due to the diversity
of vehicles and operations. As a solution, the European Commission has developed a software
20 Emissions Analytics (2015). Available at: http://emissionsanalytics.com/the-end-of-the-road-for-dirty-diesels/.
21 TIAX (2011) European Union Greenhouse Gas Reduction Potential for Heavy-Duty Vehicles. Available at: http://ec.europa.eu/clima/policies/transport/vehicles/heavy/docs/icct_ghg_
reduction_potential_en.pdf.
136
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tool (VECTO22) to simulate whole vehicles and calculate their emissions based on the performance
of individual components. VECTO is currently being rolled out to industry in order to verify its
calculations against real-world data before it is used to inform policy. This process is expected to
end in mid-2016.
• VECTO will initially be used to certify the emissions performance of new HGVs in order to provide
buyers with more accurate information and encourage competition between manufacturers to
improve fuel economy. An announcement on the detail of this regulation is expected in late 2015 or
early 2016.
• The strategy outlines a medium-term plan to carry out further analytical work to establish the
technological potential and cost-effectiveness of deeper abatement, which could be used to inform
mandatory new vehicle CO2 targets, though no dates have been provided.
We recommend that the Government closely monitors the work to develop an EU regulatory framework
for CO2 from HGVs and pushes for the introduction of new vehicle standards as soon as possible.
While European regulation is likely to be required to reduce emissions from new HGVs, there are other
opportunities to reduce the CO2 intensity of the existing HGV fleet by deploying retrofit technologies
(Section 3).
The Government has also been investigating whether using natural gas as a fuel in HGVs could reduce
emissions (Technical Annex 4 – Transport). We welcome the Government’s work to assess the CO2
benefits of natural gas and continue to recommend that the CO2 impacts are fully evaluated before
rolling out nationwide infrastructure and support.
(e) Buses and rail
There are several policies in place to reduce emissions from buses and rail. As current emissions from
these modes make up a very small proportion of surface transport emissions (5%), we do not consider
these policies here but they are discussed in the Technical Annex (Technical Annex 4 – Transport).
Progress in developing electric vehicle markets
ULEVs will play an important role in decarbonising transport to 2030 and beyond. In recent years, a
wide range of fully or partially electric vehicle models has become commercially available in the UK,
with capabilities and costs that are approaching those of conventional cars. At present other ULEV
types, such as hydrogen fuel cell vehicles, cannot be deployed at scale due to high costs and a lack of
infrastructure. In future, such vehicles may make a significant contribution to decarbonising the fleet,
but in this section we focus on the existing market for electric vehicles.
Whilst it is important for the UK to develop a market for EVs as part of the cost-effective path to
meeting carbon budgets, the cost reductions needed to accelerate uptake will be driven by growth in
the global market for EVs. The global market is growing rapidly and production is being ramped up by
key manufacturers, with some evidence that costs are falling more quickly than anticipated:
• The number of EVs in the UK is 3% of the global stock of around 665,000. 67% of the EV stock is
located in just three countries; the US, China and Japan23.
• Global sales increased by 53% in 2014 to around 300,000. The UK was ranked 8th in the world for
EVs as a percentage of new sales in 201424.
22 European Commission (2014). Available at: http://ec.europa.eu/clima/events/docs/0096/vecto_en.pdf.
23 IEA (2015) Global EV Outlook 2015. Available at: www.iea.org/.
24 IEA (2015) Global EV Outlook 2015. Available at: www.iea.org/.
Chapter 4: Progress reducing transport emissions 137
1
• Tesla Motors has started construction of a new “Gigafactory” in California, to reduce the cost of
EV battery packs through economies of scale. It will begin production in 2017 and aims to be
producing battery packs for 500,000 cars a year by 2020, with projected cost reductions of more
than 30%.
• Recent research suggests that battery pack costs have fallen more rapidly than was previously
anticipated25 and estimates that battery pack costs could reach $230/kWh by 2017-2018 if current
trends continue. Research we commissioned in 201226, suggested that costs would not reach this
level until after 2020.
The reliability of batteries is particularly important for the development of EV markets. Data on the
growing global fleet of EVs has now been collected for several years and there are early signs that
batteries have been performing well.
• In March 2015, Nissan published the results of a study on the performance of 35,000 Leaf vehicles
that have been sold in the last five years. Battery failure rates were low at 0.01% and maintenance
costs were found to be 40% lower than conventional equivalents27.
• Glass’s, an organisation that publishes detailed analysis of the UK second-hand car market, has
decided to review its forecasts of EV residual values in light of the Nissan study.
This new information will help to stimulate a second hand market for EVs, which should in turn provide
confidence to new car buyers that EVs can hold residual value.
(a) Current market for EVs
There was a significant increase in UK EV sales in 2014, which has continued in 2015. EV sales are now
above our indicator and this will remain the case if sales continue at their current rate in 201528.
• EV sales were 15,277 in 2014 compared with 3,765 in 2013 and above our indicator trajectory of
11,250. This represented 0.3% of total new car sales in 2014.
• Sales have continued to increase in 2015; in the first quarter 1.2% of cars sold were EVs.
Manufacturers are providing consumers a varied choice of EV models at different prices and across
different size segments. At present 25 models of electric car are available in the UK, up from 19 in
201429 (Technical Annex 4 – Transport).
In Budget 2014, the Government announced £500 million to promote the uptake of EVs and other
ULEVs to 2020. This funding was allocated to a range of policies including grants to support the
purchase of an EV, support for charging infrastructure and support for local authorities to incentivise EV
uptake in their area. No new support has been announced but further detail has become available on
how the money will be allocated (Technical Annex 4 – Transport).
In addition, the Low Carbon Vehicle Partnership has commissioned a good practice guide to provide
local authorities with advice on implementing policies to promote the uptake of Low Emission
Vehicles. This covers measures such as parking incentives, infrastructure provision, road charging
and access to car clubs and highlights case studies of successful policies implemented by different
local authorities.
25
26
27
28
29
138
B. Nykvist and M. Nilsson (2015) Rapidly falling costs of battery packs for electric vehicles, Nature
Element Energy (2012) Cost and performance of EV batteries. Available at: www.nature.com/.
Nissan (2015) Available at: http://www.newsroom.nissan-europe.com/uk/en-gb/Media/Media.aspx?mediaid=131212
Based on data from SMMT.
Based on data from nextgreencar.com.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
(b) EVs – Forward look
Our cost-effective path to meeting carbon budgets suggests that 9% of new car sales should be EVs
by 2020 and 60% by 2030 (a mixture of battery-electric and plug-in hybrid electric vehicles)30. Whilst
only 0.3% of new cars were EVs in 2014, the share of sales has grown to over 1% in the first quarter of
2015 and policy measures to support higher uptake are in place to 2020.
In our 2014 Progress Report we made a series of recommendations on how EV uptake should be
promoted. Progress against these recommendations has been mixed, with significant financial support
committed but a lack of longer-term direction for policy. We re-iterate those recommendations in this
report and provide more detail on what needs to be done:
• Central and local government should tackle financial and non-financial barriers to electric vehicle
uptake; including access to low-cost finance, investment in charging infrastructure and roll-out of
softer measures to promote EV uptake.
– There are likely to be 50,000 electric cars on the road before the end of 2015, at which point
the Government will need to review the plug-in car grant scheme. While EVs remain more
expensive than their conventional alternatives from a consumer perspective, the Government
should continue to provide support for their upfront purchase costs. In the short-term this could
continue in the form of a grant, but as EV uptake grows, Government grants could become
financially unsustainable. An alternative approach would be to develop low-cost finance deals,
with lower interest rates and longer payback periods. This could make EVs competitive with
conventional cars by the early 2020s, by spreading the upfront costs over a longer period and
taking advantage of their lower running costs31.
– Strong progress has been made in rolling out a national rapid charging network on the road
network. Installation of rapid chargers is around half way to achieving national coverage
requirements. While there has been some progress in the installation of public charging
infrastructure in towns and cities, more work is needed to help deliver on-street residential
charging infrastructure so that drivers without off-street parking can choose an EV.
– Progress has also been made in the development of softer measures to encourage EV uptake at
a local level, with measures such as the City Scheme and ULEV Taxi Scheme. We recognise the
importance of properly trialling these schemes in a limited number of cities before expanding
more widely, but recommend that measures found to be successful are promoted at a national
level as early as possible.
• In the context of a strong EU target and/or effective measures to tackle of financial and nonfinancial barriers, the Government should plan for the phasing out EV subsidy and consider whether
there is any benefit in announcing this in advance. There will not be an EU target in place before
the end of 2015 and many non-financial barriers to uptake remain. We therefore advise that support
for upfront costs should continue and not be phased out prematurely.
With the market for EVs growing, there are also early signs that a market for hydrogen fuel cell vehicles
may begin to develop in the next few years.
• The first hydrogen fuel cell car is likely to go on sale in the UK in 2015, albeit in limited numbers.
30 CCC (2013) Fourth Carbon Budget Review – Technical report. Available at: www.theccc.org.uk/.
31 CCC (2014) Meeting Carbon Budgets – 2014 Progress Report to Parliament
Chapter 4: Progress reducing transport emissions 139
1
• The Government has launched an infrastructure grant scheme for hydrogen refuelling stations. The
scheme aims to support the roll-out of a UK hydrogen fuel network, capable of servicing fuel cell
electric vehicles. Funding of £3.5 million will be provided to develop up to seven new hydrogen
refuelling stations, with a further £2 million being made available to upgrade up to eight existing
demonstration stations.
Biofuels in surface transport
(a) Biofuels progress to date
In 2014 biofuel penetration increased to 3.2% by energy. This is below our indicator of 3.7%, partly as
a result of EU sustainability standards introduced in 2012, which double-count the contribution from
waste-derived biofuels. The percentage of fuel meeting sustainability requirements increased, as did
estimated GHG savings:
• In 2013/14 waste-derived biofuels made up 46% of the total, up from 40% in 2012/13. The supply
consisted of 47% bioethanol, 49% biodiesel and 2% biomethanol.
• Using the EU estimation methodology, GHG emissions savings from biofuels were 69% in 2013/14,
compared to 66% in 2012/13. These savings do not include the impacts of indirect land use change
(ILUC).
After seven years of negotiations the EU recently reached an agreement on crop based and advanced
biofuels (Box 4.4).
Box 4.4: Latest EU biofuels sustainability accounting framework
In our 2014 Progress Report, we reported the European Council had failed to reach an agreement on proposals to
ensure the sustainability of biofuels but that talks were ongoing. In April 2015 the European Parliament gave final
approval to an amendment of the Renewable Energy Directive supporting stronger sustainability standards.
The amendment will limit crop based biofuels to 7% of transport energy, within the 10% renewable transport energy
target. ILUC emissions will be reported but not included in sustainability requirements at this stage. Member states
must also set a national target for the share of advanced biofuels to 2020.
Funding of £25 million was announced in 2013 for up to three demonstration-scale advanced biofuel
plants. The competition was launched in December 2014 alongside a feasibility report outlining the
potential for the UK to be a global leader in advanced biofuels. Six applications have been approved to
progress to the second phase of the competition and the three winning projects will be announced
later this year.
(b) Biofuels forward look
The Renewable Transport Fuel Obligation (RTFO) target is currently set at 4.75%32 for 2015/16. This
will need to be reviewed in light of the EU agreement on the detail of the 2020 target. Our previous
analysis assumed biofuel penetration of 8% by energy by 202033. We will be reviewing the feasibility of
this level of penetration as part of our work for the fifth carbon budget.
In line with EU requirements, the Government should set a trajectory for the RTFO to 2020 which sets a
stretching national target for advanced biofuels. The Government should push the EU to take account
of ILUC factors in sustainability standards for biofuels as soon as possible following member states’
mandatory reporting of these impacts.
32
33
140
By volume, including double counting.
Consistent with the Gallagher Review (2009).
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
3. Progress in changing travel behaviour
Behaviour change and its impact on carbon budgets remains an emerging area: evidence of impacts,
trials and understanding what works is still developing. The Committee will be looking into this area
in more detail over the coming years. In this section we provide a brief overview of current policies
and preliminary evidence about their impacts. We focus on measures designed to influence choice
of passenger travel mode and measures to improve the efficiency of freight operations. Measures to
encourage eco-driving and limit speeding are considered in the Technical Annex (Technical Annex 4 –
Transport).
Smarter choices
(a) Progress to date
Smarter Choices cover a range of measures designed to influence choice of transport mode, with
the aim of reducing car travel. Whilst there has been some progress in changing passenger travel
behaviour in specific locations, progress at a national level has been limited:
• The average distance travelled has fallen since 2005, but the split between modes has remained
largely unchanged since 2007.
• In 2013, the most significant percentage of distance travelled was by car (77%), with much smaller
percentages for public transport (17%) and walking or cycling (4%)34.
The Local Sustainable Transport Fund (LSTF) is the main source of funding to support Smarter
Choices projects, though environmental benefits are generally a secondary objective to promotion of
economic growth. This has included investment in infrastructure to promote walking and cycling, as
well as schemes designed to encourage the use of public transport and car clubs. Around £1 billion
has been spent on LSTF projects since 2011 and in 2015/16 it will be supporting 44 new projects across
approximately 35 local authorities.
There is no comprehensive evaluation of the environmental impact of the LSTF, though DfT estimates
that only 1% of expected benefits are due to a reduction in carbon emissions35. An interim metaanalysis of LSTF is planned for publication this year. Such evaluations are essential for ensuring carbon
savings are maintained within Smarter Choices programmes.
With no plans to continue the LSTF beyond 2015/16, the Local Growth Fund and Door-to-door strategy
would be the main sources of funding for Smarter Choices schemes.
• The Local Growth Fund aims to stimulate economic growth across the country by devolving power
to Local Enterprise Partnerships. The fund can be used to invest in new infrastructure, including
transport infrastructure. Whilst consolidation of funding sources may be beneficial in terms of
administration, reduction of carbon emissions is not a key objective of the Local Growth Fund.
• The Door-to-door strategy aims to support sustainable travel through greater use of public
transport by considering the full door-to-door journey. The strategy identified four main barriers
to public transport; information, ticketing, interchange facilities and connectivity. Two Door-todoor action plans have been published since our last Progress Report. These plans reported on
expenditure on improving accessibility and perceptions of public services.
It is difficult to assess the potential impacts of these schemes as expenditure on schemes through the
Local Growth Fund has not yet been specified and the Door-to-door strategy schemes have not been
fully evaluated.
34 DfT (2014) National Travel Survey. Available at: www.gov.uk/.
35 DfT (2014) Value for Money Assessment for the Local Sustainable Transport Fund. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/
file/347894/vfm-assessment-of-lstf.pdf
Chapter 4: Progress reducing transport emissions 141
1
(b) Forward look
Government emission projections assume that the LSTF contributes a 1% reduction in road transport
emissions in 2015, with savings declining over time after the scheme ends. This assumption appears
reasonable given the available evidence, notwithstanding uncertainties.
Our analysis of the cost-effective path suggests a nationwide rollout of Smarter Choices by the third
carbon budget period, resulting in a total reduction of 5% in car-km and a carbon reduction of around
3 MtCO2, based on published evaluations of the scheme36.
The reported co-benefits of Smarter Choices appear to support the wider and longer-term rollout
of local projects aimed at shifting transport away from private vehicles37. However the Government
should ensure evaluation of carbon savings from current schemes is carried out in order to implement
cost-effective co-beneficial programmes.
Freight operations
(a) Progress to date
Freight operators have strong incentives to save fuel, with fuel costs making up about 20-40% of all
operating costs38. There are opportunities for operators to reduce their fuel consumption, either by
reducing the number of kilometres per tonne of goods moved through more efficient logistics or by
improving the fuel efficiency of kilometres driven.
HGV operators can reduce their total kilometres driven by implementing measures such as improved
routing, improved vehicle fill and use of high capacity vehicles. There is evidence from DfT’s Road
Freight Statistics that uptake of these measures is increasing amongst operators39 (Technical Annex 4 –
Transport).
• Between 2009 and 2013, the percentage of HGVs making use of GPS technology increased from
33% to 49%.
• The average tonne-km moved by an HGV while loaded compared to its potential maximum tonnekm provides a measure of vehicle fill. This percentage increased from 57% to 63% between 2009
and 201340.
• The percentage of tonne-km moved by the heaviest HGVs (44 tonne articulated HGVs) increased
from 60% to 67% between 2009 and 2013.
Further improvements to logistics operations could reduce kilometres driven and save fuel41. This
includes measures such as reducing empty running, use of consolidation centres and use of higher
capacity vehicles:
• Collaboration between operators can help to reduce empty running by enabling the use of return
journeys to carry loads for other operators. Consolidation centres offer similar opportunities to
improve vehicle fill by matching freight from a number of operators to a shared final destination.
There are barriers to collaboration within the industry, such as a lack of information about
whether such practises infringe on competition law. Clear guidance from the Government or the
Competition and Markets Authority on the legal implications of increased collaboration could help
to increase uptake.
36
37
38
39
40
41
142
CCC (2013) Fourth Carbon Budget Review – Technical report. Available at: www.theccc.org.uk/.
DfT (2015) Local Sustainable Transport Fund Annual Report 2013/14. Available at: www.gov.uk/.
FTA (2014). Available at: http://www.fta.co.uk/policy_and_compliance/fuel_prices_and_economy/fuel_prices/fuel_fractions.html.
Based on CCC analysis of an extract from DfT’s Road Freight Statistics.
This does not take account of the percentage of kilometres vehicles run empty, which has stayed relatively constant at around 29% between 2009 and 2013.
A McKinnon, S Cullinane, A Whiteing, Michael Browne (2015) Green Logistics: Improving the Environmental Sustainability of Logistics
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
• There is evidence that using higher capacity vehicles can save fuel by reducing kilometres driven
for a given load. In 2012, DfT launched a trial for longer semi-trailers, which are not currently legally
allowed on UK roads. The trial is expected to save around 3,000 tonnes of CO2 from around 1,800
vehicles. There is some opposition to the use of larger vehicles due to concerns over the safety of
other road users, which this trial aims to address. If the trial proves successful, a change in regulation
should be considered to allow longer vehicles on the road.
In addition to logistics measures, operators can improve the efficiency of kilometres driven by
retrofitting their vehicles with fuel saving technologies, such as aerodynamic fairings and low-rollingresistance tyres, and by training drivers in eco-driving techniques. There are likely to be opportunities
to reduce emissions further from roll-out of such measures, but evidence of the extent to which they
are already taken up is limited.
Uptake of such measures is currently driven by voluntary, industry-led action. There are a number of
industry-led schemes to help members reduce their fuel consumption, the most notable of which
is the Freight Transport Association’s Logistics Carbon Reduction Scheme (LCRS). Whilst the LCRS
has been successful in improving the efficiency of its members’ operations, its membership remains
relatively small. By May 2015 it had grown to 109 members covering over 59,000 HGVs, (c15% of HGVs).
The LCRS has a target to reduce emissions intensity by 8% between 2010 and 2015; this compares to
the Government’s 5% target for the sector as a whole. Data for 2013 are now available and show that
LCRS members achieved a 4% improvement on 2010 levels. LCRS projections suggest that members
are now likely to miss the 8% target and achieve around a 6.6% reduction. A post 2015 target for LCRS
will not be announced until 2016.
As noted above, the Government has advocated an industry led approach to reducing emissions from
the freight sector. However, there are a number of recently launched Government schemes that may
promote new fuel saving opportunities to freight operators:
• The Government is currently supporting the Low Carbon Vehicle Partnership in the development
of an accreditation scheme for fuel saving technologies. The scheme will verify the fuel savings
achieved by fitting technologies to specific truck types, so that operators can have confidence that
a particular investment will be cost-effective. It is anticipated that that the scheme will not require
financial support from Government but will receive endorsement and support in raising awareness.
The scheme is due to be launched later this year.
• In 2014 the Government launched the Energy Savings Opportunity Scheme (ESOS) to comply with
the EU Energy Efficiency directive. Under ESOS, large companies42 will have to undertake energy
audits every four years to identify cost-effective energy saving measures. For many companies,
vehicle fleets are likely to fall within the scope of ESOS. The extent to which compliance with ESOS
will encourage companies to adopt new fuel saving measures is uncertain, but it may provide an
opportunity to disseminate information on the most cost-effective measures.
We have commissioned a research project to investigate the potential for reducing emissions by
implementing demand-side measures across different sectors of the freight industry as well as
different vehicle and journey types. The analysis will also consider barriers to uptake and how these
might be addressed. The Committee will consider the outputs from this work in developing its
recommendations for the fifth carbon budget.
42
ESOS applies to companies that employ 250 or more people, or have an annual turnover in excess of £38 million, and an annual balance sheet total in excess of £33 million.
Chapter 4: Progress reducing transport emissions 143
1
(b) Forward look
Our analysis of the cost-effective path suggests a 6.5% reduction in HGV-km by 2030, relative to
business as usual. This is achieved through supply chain rationalisation, better vehicle utilisation and
some modal shift to rail and water. Progress in achieving uptake of demand-side measures through
industry-led action has been limited to date. More work needs to be done to understand the nature
of barriers to adoption and whether Government can play a role in supporting the whole industry to
reduce emissions and become more efficient.
• The LCRS has demonstrated that demand-side measures can achieve emissions reductions and fuel
savings, but the scheme’s impact on emissions from the whole HGV fleet is small due to its limited
membership.
• The Government should undertake a wider review of policy levers to improve the CO2 intensity of
freight operations. This should identify the barriers to uptake of technology and logistics measures,
including collaboration between operators, and suggest policies to overcome those barriers.
• Policies should recognise the diversity of HGV operations and promote the implementation of
proven cost-saving measures.
• Policies should help both small and large operators save fuel and become more efficient. Policy
design could involve both DfT and BIS and consider whether support could be delivered in the
context of BIS policies to provide advice and support to small and medium sized enterprises.
Our forthcoming research project will help to improve the evidence base in this area.
4. Progress in reducing emissions from aviation and shipping
Recent developments in aviation and shipping policy reflect progress developing existing and agreed
approaches, at international, EU and UK levels:
• International – For aviation, the International Civil Aviation Organisation (ICAO) continues to
develop a Market Based Measure (MBM) to control international aviation emissions. In 2013 it was
agreed this would be decided at their 2016 General Assembly, to come into force in 2020. Since
then, the ICAO has established an Environment Advisory Group to oversee technical work related
to the development of a global MBM system, and has recently completed a comprehensive
stakeholder engagement programme. For shipping, the International Maritime Organisation (IMO)
continues to support implementation of the Energy Efficiency Design Index, which entered into
force in 2013. In 2014 the IMO published updated projections of global shipping emissions to 2050,
and also reached agreement in principle to develop a data collection system for fuel consumption
in shipping.
• EU – Intra-EU aviation emissions continue to be covered by the EU ETS; this is a reduction of around
75% in the original full coverage which also included EU flights to and from non-EU countries.
This reduction in coverage is in place until 2016, in order to allow the ICAO time to develop a
global measure. In April 2015 the EU adopted legislation requiring ships using EU ports to report
their annual greenhouse gas emissions from 2018. This is designed to contribute to building an
international reporting system, and is the first step in the EU’s shipping strategy (where the second
stated step is for emission reduction targets, and the third step is for further measures, including
market instruments, in the medium to long-term).
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• UK – In November 2014 the Airports Commission launched a consultation on the three options for
airport expansion identified in their 2013 Interim Report. The purpose of the consultation was to
inform their final report which is expected in summer 2015 and which will recommend one of the
three options to Government.
In future, both aviation and shipping emissions are projected to rise in the absence of further measures.
They can be reduced through a combination of fuel efficiency improvements, use of biofuels and, in
aviation, a moderation in demand growth.
In the context of future policy and infrastructure investment decisions, appropriate long-term
assumptions for Government planning are for aviation emissions to be around 2005 levels in 2050
(implying around a 60% increase in demand over the same period), and for shipping emissions to be
around one-third lower than 2010 levels. Government should publish an effective policy framework for
aviation emissions on this basis.
These planning assumptions should be regarded as proxies for outcomes under long-term
international agreements. The Government should therefore continue to push for strong international
and EU policies consistent with the 2°C climate objective, which will be required to unlock the full
range of abatement potential whilst limiting risks of competitive distortions.
5. Forward look
We have advised that domestic transport emissions should fall to around 81 MtCO2 by 2025 as part of
the cost-effective path to meeting carbon budgets.
We have considered the extent to which existing and planned policies are likely to deliver the
measures required to meet carbon budgets. Our analysis suggests that policies will go some but not
all of the way to delivering these measures (Figure 4.12).
• According to DECC’s updated emissions projections, transport emissions in the absence of policy
would be 123 MtCO2 in 2025, falling to 98 MtCO2 when estimated policy savings are included.
• This leaves a significant gap to be addressed in order to meet carbon budgets. Our cost-effective
path suggests this could be achieved with further conventional vehicle efficiency beyond EU 2020
targets, penetration of electric vehicles, some further use of sustainable biofuels, together with
ongoing demand-side measures in the passenger and freight sectors.
• In addition, we have limited confidence in the savings that will be delivered by current and planned
policies (Technical Annex 4 – Transport). If only those savings from low-risk policies are delivered,
transport emissions would be higher than DECC’s projections in 2030, leaving an additional gap to
be addressed.
In order to deliver necessary reductions in transport emissions, it is therefore important that new policy
approaches are developed; our key recommendations are summarised at the start of this chapter.
Chapter 4: Progress reducing transport emissions 145
1
Figure 4.12. Assessment of emissions savings from current and planned policy against the cost-effective path
in transport
140
Lower-risk policies
At-risk policies
Policy gap
Baseline admissions
Cost-effective path
Outturn
120
MtCO2e
100
80
60
40
20
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
0
Source: DECC (2014) Updated emissions projections, CCC analysis.
146
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6. Summary
Decarbonisation of the transport sector is achievable and can be done cost-effectively. It will require a
combination of measures to be implemented, targeting investment, innovation and behaviour change:
• Low-carbon investment: Under our cost-effective path, the car and van market will be transformed
by 2030, with 60% of new sales being an ultra-low emission vehicle. This transition will require
vehicle manufacturers to continue to make significant investments in new supply chains and skills.
Strong EU regulatory targets should incentivise manufacturers to invest and deliver a supply of
affordable new vehicle models. EU regulation should be coupled with strong domestic policy to
incentivise uptake, such as support for the upfront costs of ultra-low emission vehicles, while they
remain higher than conventional vehicles, and a fiscal regime that strongly favours the lowest
emission vehicles. Continued public and private sector investment in charging infrastructure will
also be required to encourage uptake of electric vehicles.
• Developing future options and innovation: Innovation will play a key role in providing the cost
reductions and technological improvements required to decarbonise transport. For example,
improving the range and charging time for electric vehicles whilst reducing their costs will be vital
to increase their uptake. Given the nature of the vehicle manufacturing industry, innovation in
technology is likely to be driven at an international scale. As with investment, a strong EU regulatory
regime to 2030 is crucial to incentivise manufacturers to innovate and deliver the required
improvements. The UK should continue to invest in research and foster collaboration between
industry and academia in technology areas where it has a strong position to help develop lower
emission vehicles.
• Low-carbon choices: There is significant potential for reducing emissions by changing behaviour;
avoiding unnecessary journeys, shifting to more sustainable modes or choosing to buy an ultralow emission vehicle. In passenger transport, the CO2 benefits of reducing demand for car travel
need to be reemphasised alongside economic and public health benefits and measures need to
be supported by a strong evidence base. In freight, the Government should review the barriers
to adoption of technology and logistics measures and develop policy to address these barriers. In
supporting an early market for electric vehicles, the Government should continue to roll out policies
to tackle barriers to uptake, ensuring appropriate financial and non-financial incentives, access to
charging infrastructure and a higher level of public awareness and acceptance.
Chapter 4: Progress reducing transport emissions 147
1
Chapter 5: Progress reducing
emissions from agriculture
1.Agriculture emissions trends and
drivers
2.Progress against indicators
3.The policy framework
4.Forward look
5. Land use, land use change and
forestry (LULUCF)
6. Summary
Key messages and recommendations
This chapter presents the latest evidence of UK greenhouse gas (GHG) emissions in agriculture and
the land use, land use change and forestry (LULUCF) sectors. These sectors are affected by the
changing climate, which is likely to impact future agricultural productivity and GHG emissions, for
example, potentially extending growing periods for some crops, and reducing organic matter in
soils. These are set out in more detail in our Adaptation Progress Report, and we will be producing
further joint work in the future.
In 2013 agriculture accounted for around 9.5% of UK GHG emissions, while the LULUCF sector was a
net carbon sink of 5 MtCO2e (equivalent to abating 1% of UK GHG emissions). The estimates of GHG
emissions in the sectors are highly uncertain. This creates significant problems in tracking progress,
and more widely for understanding whether carbon budgets are being met.
Our key messages are:
• Agricultural emissions reached 54 MtCO2e in 2013, broadly unchanged from the previous year.
Inventory changes mean that in 2013 estimated emissions of methane in agriculture are now
higher than nitrous oxide.. The LULUCF sector increased net absorption rates over the same
period by 6%.
• Nitrous oxide emissions intensity improved for crops in 2013 but deteriorated for livestock.
For crops, lower fertiliser use, associated with poor weather, and higher arable crop output
combined to reduce nitrous oxide intensity. For livestock, higher inorganic fertiliser use on
grasslands and a much lower rise in livestock output led to an increase in nitrous oxide intensity.
1
• Methane emissions intensity of livestock output improved by 1% in 2013, as methane emissions
decreased slightly and output rose. The main driver of the reduction in methane emissions was
reduced cattle numbers rather than efficiency gains, while output of other livestock products
rose.
• The GHG Action Plan is the only policy directly aimed at reducing agricultural emissions in
England. It is not possible to fully assess the effectiveness of the plan in delivering emission
reductions given the lack of effective monitoring and evaluation. This needs to be addressed
and stronger policies may be required to deliver emissions reduction consistent with the
Committee’s estimates of the cost-effective path to 2030.
• While 2013 emissions are broadly on track with our indicators, our trajectory to the fourth
carbon budget continues to be at risk given the absence of policy options beyond 2022.
Preparation for deeper cuts is needed to keep the sector on track to the 2050 target.
• Mitigation in agriculture and forestry is a devolved issue. Action is being undertaken in each
of the four countries of the UK to either reduce agriculture emissions or improve emissions
intensity, and to increase tree planting rates. It is unclear if actions taken to reduce emissions are
consistent with our carbon budgets and this needs to be addressed.
Chapter 5: Progress reducing emissions from agriculture
149
Our key recommendations are:
• Deliver the Smart Inventory to the current timeline: the Smart Inventory is essential for
effective measurement of emissions from agriculture and should be delivered in 2016, without
further delays.
• Strengthen the current voluntary approach to reduce agricultural emissions: the farming
industry should develop robust indicators to properly evaluate the GHG Action Plan. Government
should consider stronger measures as part of its 2016 review if it cannot assess the effectiveness
of the existing scheme.
• Co-ordinate effort to reduce emissions from agriculture and forestry: ensure measures being
implemented across the four nations are feasible, cost-effective and consistent with UK carbon
budgets.
We set out the analysis that underpins these conclusions in the following sections:
1. Agriculture emissions trends and drivers
2. Progress against indicators
3. The policy framework
4. Forward look
5. Land use, land use change and forestry
6. Summary
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1.
Agriculture emissions trends and drivers
Emissions in agriculture are dominated by non-CO2 greenhouse gases. We are only able to report on
2013 emissions because of the lag in reporting non-CO2 data. In this section we set out how emissions
have changed and the drivers of change in the year to 2013 and the recent past.
Emissions trends
Current data suggest that overall agriculture emissions remain unchanged in 2013 from the previous
year at around 54 MtCO2e. The sector accounted for 9.5% of total UK greenhouse gas emissions
(Figure 5.1).
Figure 5.1. GHG emissions from agriculture in the context of total UK emissions (2013)
Nitrous oxide
3.8%
Methane
4.8%
Carbon dioxide
0.9%
Total UK GHG emissions
568 MtCO2e
Other sectors
90.5%
1
Source: NAEI (2015).
Note: Emissions from other sectors excludes international aviation and shipping sectors.
Emissions by gas and source were similar to 2012 levels with the exception of carbon dioxide which
declined by 4% from the previous year (Table 5.1). Total emissions decreased by an annual average of
0.2% between 2009 and 2013, which represents a slowdown of the longer-term trend of a 19% decline
since 1990 (equivalent to an annual average decline of 0.9%).
Chapter 5: Progress reducing emissions from agriculture 151
Table 5.1. Change in emissions by gas and source (2013)
By GHG
Actual 2013
emissions
(MtCO2e)
change from
2012
average annual
change (2009-13)
Methane
27.0
-0.4%
-0.2%
Nitrous oxide
21.8
0.5%
0.1%
Carbon dioxide
4.9
-4%
-1.4%
53.7
-0.4%
-0.2%
Enteric fermentation
23.5
-0.6%
-0.2%
Soils
20.5
0.5%
0.1%
Wastes & manure management
5.3
0.5%
-0.2%
Mobile & stationary machinery
4.5
-1.6%
0
Total
By source
Source: NAEI (2015) and CCC calculations
Although overall emissions have remained largely unchanged from 2012, amendments to the way the
inventory is calculated have changed the overall level of emissions and the composition of emissions
by gas and source from previous inventories (Box 5.1):
• GHG emissions are now lower across the time series than previously estimated (Figure 5.2).
• Methane emissions are now estimated to be higher than emissions of nitrous oxide (N2O),
accounting for 50% of emissions (compared to 39% of 2012 emissions as reported in last year’s
inventory).
• Emissions from enteric fermentation (which occurs due to the digestive process of ruminant
animals) rather than soils are now estimated to be the largest source of emissions.
Box 5.1. Main changes to calculating the 2015 agriculture inventory
Changes to the method for calculating emissions in the 2015 agricultural inventory reflect the adoption of the IPCC
2006 guidelines and improvements in estimates made by Defra. The result is a proportional shift from nitrous oxide
emissions to methane emissions.
The main changes by moving from the 1996/2000 to 2006 IPCC guidelines are:
• Revisions in the Global Warming Potential (GWP) values, with methane up from 21 to 25, while the GWP value for
nitrous oxide is now lower at 298 compared to 301.
• A downward revision in some of the emissions factors for soils (e.g. leached nitrogen) and an upward revision for
enteric fermentation (e.g. the proportion of energy in the diet converted to methane for cattle increased from 6%
to 6.5%).
In addition, new research funded by Defra has updated estimates for the weights of beef cattle, which are now heavier
than previously calculated. This has the effect of increasing methane emissions.
Source: 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Defra GHG Platform (projects AC0114 and SCF0102)
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Although these inventory amendments represent an improvement in emissions reporting, the
estimates are still subject to a large degree of uncertainty, with a range that puts emissions as low
as 43 MtCO2e to a high of 76 MtCO2e. This has serious implications for the sector in understanding
whether the UK as a whole is on track to meet the fourth carbon budget. It is vital that measurement
in this area is improved. The new Smart Inventory, due to be rolled-out in 2016 should improve the
accuracy of these estimates and reduce the range of uncertainty associated with agricultural emissions.
It is important that this is delivered on time.
Figure 5.2. Impact of methodology changes to the agricultural inventory
80
Total GHG emissions
(2014 inventory)
Total GHG emissions
(2015 inventory)
Methane emissions
(2014 inventory)
Methane emissions
(2015 inventory)
N2O emissions
(2014 inventory)
N2O emissions
(2015 inventory)
70
MtCO2e
MtCO2e
60
50
40
30
20
1
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
1990
10
Source: NAEI (2015).
Emissions drivers
Given the lack of progress in reducing emissions in 2013, it is important to understand emissions
drivers to assess whether any progress has been made to implement measures to reduce emissions
intensity (e.g. emissions per unit of economic output). Our assessment is, however, subject to the large
degree of uncertainty in the measurement of emissions as previously set out. It further emphasises the
importance of improving the accuracy of measurement in this area.
Nitrous oxide
Agricultural soils accounts for almost 90% of nitrous oxide emissions, three quarters of which are due
to the application of fertiliser from both inorganic and organic sources (e.g. from grazing returns and
manure application) (Table 5.2). There was a slight (0.5%) rise in soils emissions in 2013 compared to
2012 as all sources of emissions with, the exception of inorganic fertiliser, increased.
The remaining sources of nitrous oxide are wastes and manure management (8%) and machinery (2%),
with the former declining by less than 1% and the latter unchanged.
Agricultural soils have experienced significant changes in the way they are managed over recent
decades, raising concerns around soil organic matter and soil erosion. These could affect their
vulnerability to future climate change impacts and productivity. Further details are given in Chapter 5
of the Adaptation Progress Report.
Chapter 5: Progress reducing emissions from agriculture 153
Table 5.2. Main sources of nitrous oxide emissions from agricultural soils (2013)
MtCO2e
% change from 2012
Inorganic fertiliser
6.9
-0.4%
Grazing returns
5.9
0.3%
Manure application
1.6
0.7%
Crop residues
3.4
2.9%
Cultivation of organic soils
1.1
0
Sewage sludge
0.3
1.4%
19.2
0.5%
Source of soils emissions
Total
Source: NAEI and CCC calculations
(a) Crops
The nitrous oxide emissions intensity of crop output declined by 6% in 2013 due to the combined
impact of a 1% increase in output and a 5% fall in nitrous oxide emissions associated with growing
arable crops:
• Nitrous oxide emissions decreased largely due to adverse weather conditions in the autumn of 2012,
which affected the sowing and early growth of winter crops. Arable farmers responded by sowing
more crops the following spring, which due to having a shorter growing period require less fertiliser,
thereby reducing emissions.
• Output of arable crops increased by 1% as a fall in wheat output was offset by increases in barley,
protein and forage crops. The total area of cropland declined by 2%, largely due to poor weather
conditions leaving many farmers unable to plant crops.
• The move to spring crops and reduced total cropland led to a 6% decrease (to 136kg/ha) in
nitrogen fertiliser use compared with the previous year.
• Reduced nitrous oxide emissions, combined with a 1% increase in crop output in 2013, led to an
improvement in nitrous oxide emissions intensity of crops of 6% (Figure 5.3).
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Figure 5.3. Crop output, N2O emissions associated with crops and emissions intensity of output (2003-2013)
Crop output
116
112
108
104
100
96
92
88
84
N2O emissions associated with crops
2013
2011
2012
2010
2009
2008
2007
2006
2005
2004
108
104
100
116
112
108
104
100
96
92
88
84
2003
2013
2013
Index 2007=100
N2O emissions intensity of crops
120
116
112
Index 2007=100
2012
2012
2011
2010
2009
2008
2007
2006
2005
2004
120
2003
Index 2007=100
120
96
92
88
2011
2010
2009
2008
2007
2006
2005
2004
2003
84
Source: NAEI (2015), Agriculture in the UK (2014), CCC calculations.
Note: Base Year (2007) = 100.
(b) Livestock
The nitrous oxide intensity of livestock products worsened in 2013 due to an increase in nitrous oxide
emissions, which exceeded the rise in livestock output (Figure 5.4):
• The 8% increase in nitrous oxide emissions was largely due to a 7% rebound in the use of inorganic
fertiliser on grasslands in 2013, after levels had dipped to a 30 year low of 55kg/ha in 2012 (Figure
5.5).
• Livestock output increased by 1% in 2013, with higher output of lamb and poultry partially offset by
reduced cattle output. Weather affected the quality and quantity of forage feed at the start of the
year which resulted in lower average dressed carcase weights for beef.
• The combined impact was an increase in nitrous oxide emissions intensity of livestock output of 7%.
While efficient use of organic and inorganic sources of fertiliser is important for reducing emissions,
there are also co-benefits in terms of reducing diffuse water pollution and improving biodiversity.
Chapter 5: Progress reducing emissions from agriculture 155
Figure 5.4. Livestock output, N2O emissions associated with livestock and emissions intensity of output
(2003-2013)
100
96
92
2013
2012
2011
2010
2009
2008
2007
2006
2003
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Index 2007=100
116
112
108
104
100
96
92
88
84
2005
N2O emissions intensity of livestock
120
120
116
112
108
104
100
96
92
88
84
2004
2012
2011
2009
2010
2008
2007
2006
2005
2004
2003
88
84
Index 2007=100
N2O emissions associated with livestock
2013
Index 2007=100
Livestock output
120
116
112
108
104
Source: Source: NAEI (2015), Agriculture in the UK (2014), CCC calculations.
Note: Base Year (2007) = 100.
Figure 5.5. Inorganic fertiliser use (2003-2013)
160
Arable
Grasslands
All
140
120
kg/ha
100
80
60
40
20
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: British Survey of Fertiliser Practice (2014).
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Methane
Methane intensity of livestock output improved by 1% in 2013, as methane emissions declined and
output rose (Figure 5.6):
• Methane emissions declined by 0.5% in 2013, driven by a 1% reduction in cattle numbers compared
to the previous year. Cattle account for almost 80% of methane emissions so any change in the size
of the herd has a big impact on methane emissions. With both cattle numbers and the average
dressed carcass weights for beef declining by 1% in 2013, it would appear that the reduction in
methane has been primarily driven by reductions in the size of the cattle herd in the absence of any
productivity gains.
• Despite the fall in beef output, livestock output as a whole increased by 1% in 2013, as output from
poultry products, sheep and pig meat rose.
• The combination of these factors led to an improvement in the methane intensity of output of 1%
in 2013.
Figure 5.6. Total livestock output, methane (CH4) emissions and CH4 emissions intensity of output (2003-2013)
Total livestock output
108
100
CH4 emissions associated with livestock output
92
108
88
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
CH4 emissions intensity
108
Index 2007=100
104
84
100
96
92
88
104
2013
2012
2011
2010
2009
2008
2007
2006
96
2005
84
100
2003
Index 2007=100
1
96
2004
Index 2007=100
104
92
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
84
2003
88
Source: NAEI (2015), Agriculture in the UK (2014), CCC calculations.
Note: Base Year (2007) = 100.
Carbon dioxide
CO2 emissions in this sector are dominated by emissions from stationary and mobile machinery (79%)
and urea and lime application (21%). Emissions from both sources decreased in 2013, by 1.8% from
machinery and 20% from urea and lime application, resulting in an overall reduction in emissions of 4%
from this source. CO2 emissions were lower in 2013 than at any time in the period from 1990, although
it is unclear how much of this was due to economic factors, improvements in energy efficiency or
increased use of renewable energy.
Chapter 5: Progress reducing emissions from agriculture 157
2.
Progress against indicators
The Government has set an ambition for reducing non-CO2 emissions in the agriculture sector in
England by 3MtCO2 by 2022 from 2007 levels, which scales up to 4.5 MtCO2 for the UK. In order to
track progress against this ambition, we set indicators for total non-CO2 emissions, and trajectories for
reducing emissions by gas and source (Figure 5.7).
These show that emissions in 2013 were broadly on track against the trajectories:
• Emissions from enteric fermentation and methane were on track.
• Emissions from agricultural soils and nitrous oxide were slightly above the indicator, although this is
within the range of uncertainty of the estimates.
Overall, our assessment for 2013 suggests that agricultural emissions are broadly on track against our
indicators. If the slight levelling off of nitrous oxide emissions persists in the future, further steps will be
needed to ensure carbon budgets are met. The new Smart Inventory will provide greater certainty in
monitoring progress.
Figure 5.7. Progress against indicators for agriculture to end of the third budget period
52
Non CO2 indicator
CH4 indicator
Enteric indicator
N2O indicator
Agriculture soils indicator
Wastes/manure indicator
MtCO2e
39
26
Non CO2 outturn
CH4 outturn
Enteric outturn
N2O outturn
Agriculture soils outturn
Wastes/manure outturn
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
0
2007
13
Source: NAEI ((2015), CCC calculations based on LCTP ambition.
3.
The policy framework
Industry-led approach (GHG Action Plan)
The Government’s ambition for a 3 MtCO2 reduction in non-CO2 emissions in agriculture in England
is being delivered through a voluntary, industry-led approach as set out in its Action Plan. The plan
is being delivered in three phases, the first of which was achieved in 2012. The Plan is currently in its
second phase which is intended to promote improvements in farming practices in seven priority areas
(Figure 5.8).
As reported in previous Progress Reports, it is difficult to evaluate the effectiveness of the industry
approach because it is not possible to assess whether progress is due to measures in the Action Plan or
to other factors.
In last year’s Progress Report, we recommended that industry develop a set of objectives with
quantifiable targets in order to allow a proper evaluation of industry action to reduce emissions.
Industry has now started work on a set of measures which go some way to address the lack of
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evidence. While these may not be able to directly attribute GHG savings to actions taken, they should
provide evidence of specific measures that have been taken to engage farmers in more sustainable
agricultural practices. It is too early to assess how useful these will be, and we will continue to monitor
progress in this area. It will be important to feed this evidence into the 2016 Government review of
whether the industry-led approach is delivering the required emissions reductions. If it is not possible
to assess the effectiveness of the existing scheme the Government should consider whether a stronger
approach is needed.
Figure 5.8. Seven priority areas in the GHG Action Plan
On-farm Actions
Crop nutrient
management*
Management
skills and
advice
Soil and land
management
Livestock
nutrition
Priority
areas
Co-ordination
and
Communication**
Related
research
Improved genetic
potential (plants
and animals)
GHGAP Steering Group Actions
Research (private and public)
Livestock
health
1
Energy
efficiency and
renewable
generation
* Manure/slurry/fertiliser/biological fixation management in grassland and arable production
* systems – supported by arable crop disease management to optimise marketable crop
** includes reporting
Source: Greenhous Gas Action Plan
Agricultural policy is a devolved matter. As in England, the devolved administrations place considerable
emphasis on a collaborative approach with the farming industry. To date all the approaches are
voluntary, although the Scottish Government has announced its intention to regulate if significant
progress is not made. Wales has set a reduction target of 1.5 MtCO2e by 2020, while the focus in
Northern Ireland is to reduce emissions intensity while allowing the sector to grow. Further details on
the Devolved Administrations are given in chapter 7. It is important that DECC assess whether action in
each of the Nations is consistent with carbon budgets and to push for further actions should this not
be the case.
Other policies affecting agriculture
The GHG Action Plan is the only policy directly aimed at reducing GHG emissions in agriculture in
England. However, there are a number of other measures at the UK and EU level whose primary
objective is not reducing GHG emissions, but which will impact on future emissions from UK
agriculture.
Chapter 5: Progress reducing emissions from agriculture 159
Agri-tech strategy
In 2013 the Government published an Agri-tech strategy which aims to improve the productivity,
sustainability and competitiveness of the agricultural sector. Two key strands of the strategy are the
Agri-Tech Catalyst programme and the Centres for Agricultural Innovation:
• Through its Agri-Tech catalyst fund, the Government is providing £70 million to fund businesses and
researchers to develop agricultural technology, and innovative and sustainable solutions to global
agricultural challenges. It is expecting to fund around 50 projects by the end of the first two rounds
of funding. This should accelerate the commercialisation of agricultural research, with longer term
benefits to sector productivity and sustainability (Box 5.2).
• This year, the Government awarded funding for the first Centre for Agricultural Innovation to
the Centre for Agri-Informatics and Sustainability Metrics. This will be a ‘big data’ centre, a key
component of which will be to analyse and disseminate data to businesses and researchers working
across the whole food chain.
It is important that Defra tracks progress of projects being funded and evaluates the impact of the
strategy on longer-term productivity and sustainability of agriculture.
Box 5.2. Examples of projects receiving funding from the Agri-tech catalyst
The following are examples of projects that have been awarded funding through the Agri-tech catalyst fund:
• Improved breeding programmes through advanced pollination technology.
• Evaluating a proxy test for feed conversion efficiency for beef cattle.
• Innovate the next generation of pig breeding using DNA sequence data.
• Novel macrocyclic lactose compounds for crop and livestock protection providing better effectiveness to pest
resistance.
• Exploring the use of genomic technologies to reduce mastitis in meat sheep.
• Engineering resistance to disease in pigs, particularly the influenza virus, with the aim of reducing the carbon
footprint of pork production.
These should contribute to improvement in the longer-term sustainability of agriculture.
Source: : Agri-tech-catalyst
Anaerobic digestion (AD)
Renewable generation is one of the abatement measures included in the GHG Action Plan, and there
is an ambition for saving 0.55 MtCO2e by 2020 through AD. The deployment of small-scale plant (up to
500 Kw capacity) more than doubled in 2014 in advance of the degression of the Feed-in-tariff (FiT).
The tariff was reduced by almost 30%, with rates falling to 11.2p/Kwh for plant capacity of 250 Kw or
less and to 10.4p/Kwh for plants with capacity of between 250-500 Kw. We will consider the impact of
the degression on AD deployment in next year’s Progress Report.
The Government is conducting a review of FiTs later this year, which will consider tariff banding and
the wider economic and environmental impacts1 of maize for bioenergy production. We welcome this
review, which should consider the scope for cost-effective support for all scales of AD using sustainable
feedstocks.
1
160
Defra (2015), Risks and opportunities of current and future maize production (SCF0405).
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Countryside productivity scheme
The Countryside productivity scheme, launched in March 2015, aims to help farmers invest in specific
equipment and innovative technology to improve productivity and sustainability in farming. The
£5 million scheme, funded under the Rural Development Programme for England, provides grants
of between £35,000 and £1 million towards a 40% reduction in costs of investments in innovative
equipment for arable and livestock farms:
• For livestock farmers, the scheme covers technologies to improve animal health, LED lighting for
housing and recycling of heat from waste emissions.
• For arable and horticultural farms, funds can be used towards the cost of more efficient slurry
injections equipment, remote crop sensing and crop robotics.
Applications for grants will be based, among other criteria, on their ability to deliver GHG reductions
and to adapt to a changing climate. The scheme should therefore promote emission reduction in
conjunction with raising productivity.
The EU’s National Emissions Ceiling (NEC) directive
The National Emissions Ceiling directive, introduced in 2010, sets limits on four pollutants responsible
for acidification, eutrophication and ground-level ozone pollution (sulphur dioxide, nitrogen oxides,
volatile organic compounds and ammonia). The EU is further considering the inclusion of methane
emissions, with a proposed target for a 33% reduction by 2030 on 2005 levels across the region,
although not all of this would necessarily fall on the agriculture sector.
For agriculture, which accounted for 48% of methane emissions in the UK in 2013, this would imply
better management of manures, which could have a complementary benefit of tackling ammonia
emissions. Defra are currently undertaking work to assess the implications of this proposal, especially
with regard to identifying measures to reduce methane emissions. It is important that this review
considers the feasibility and cost-effectiveness of such measures, which could play a role in delivering
our future abatement scenarios.
4.
Forward look
In last year’s Progress Report, our assessment was that all of the potential emissions savings from
agriculture that could help meet the second, third and fourth carbon budgets were at risk.
For this year’s report, our analysis has been updated to take account of DECC’s latest ‘no policy’
baseline projections2, but our overall assessment remains unchanged (Figure 5.9).
• Savings of 3 MtCO2e for England are at risk due to the voluntary nature of the GHG Action Plan and
the difficulties in assessing its effectiveness in terms of reducing emissions.
• Further savings are at risk in the 2020s due to the policy gap, with no commitment by Government
to implement policy options beyond 2022.
This sector will represent an increasing proportion of total emissions as other sectors decarbonise more
quickly. Preparation for deeper cuts will be needed over the period through the fourth carbon budget
in order to keep the sector on track to the 2050 target. This should start with better measurement of
emissions through the Smart Inventory and identification of cost-effective and feasible abatement
options.
2
DECC (2014) Updated Emissions Projections. Available at: www.gov.uk
Chapter 5: Progress reducing emissions from agriculture 161
1
We have commissioned research to update our assessment of such options which will feed into
our recommendations for the fifth carbon budget. This will include a qualitative assessment of the
potential for emissions reductions from dietary change. This recognises the need to identify further
reduction opportunities in the longer-term through changes in consumer behaviour both in terms of
diet change and reducing food waste.
Many of the measures set out in the Adaptation Progress Report also work towards improving
agricultural productivity which, if implemented, set a strong basis for helping to meet future carbon
budgets. These include improving soil organic matter, soil conservation methods, reducing the risks
associated with pests and diseases and improved flood management. Further details are given in
Chapter 5 in the Adaptation Progress Report.
Figure 5.9. Assesment of current and planned policies: Agriculture
70
60
At risk with design &
delivery problems
MtCO2e
50
Policy gap
40
DECC ‘no policy’ baseline
30
CCC cost-effective path to 2050
(i.e. revised 4th carbon budget
trajectory)
20
Out-turn
10
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
0
Source: DECC (2014), Updated Emissions Projections & CCC calculations.
Note: All data is consistent with UEP 2014; outturn values will therefore differ from latest provisional emissions estimates.
5.
Land use, land use change and forestry (LULUCF)
This section considers emissions in the LULUCF sector which covers many land types in the natural
world, for example forests, wetlands and grasslands. Many of these are important for societal wellbeing in terms of the biodiversity, landscapes and ecosystems they provide as well as valuable goods
and services such as clean air and water. Plans to improve the natural environment are set out in
Chapter 6 of the Adaptation Progress Report.
Emission trends
The LULUCF sector’s net carbon sink increased by 6% (equivalent to 0.3 MtCO2e) to 5.3 MtCO2e in 2013
(Figure 5.10). This was driven by:
• A 1% increase in the net absorption rates of grassland that remains as grassland; and
• A 1% reduction in emissions arising from cropland.
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Figure 5.10. LULUCF emissions and removals (1990-2013)
30
Other (e.g. wetlands)
Settlements
Cropland
Forest land
Grassland
Net emissions
20
MtCO2e
10
0
-10
2013
2011
2012
2010
2009
2008
2007
2006
2005
2004
2003
2001
2002
2000
1999
1998
1997
1996
1995
1994
1993
1992
1990
-30
1991
-20
Source: NAEI (2015).
Opportunities to reduce LULUCF emissions
A range of options can be used to increase carbon sequestration and reduce the release of emissions
in the sector. These are focused on the expansion of woodland cover and reducing losses from
degraded peatland. In addition to mitigating emissions, there are positive links to efforts to adapt to
climate change. For example, restoring degraded peatlands also improves water quality, while the
expansion of woodland cover provides ecological networks that help biodiversity shift their ranges
and distributions in order to keep pace with changes in climate. Further details are given in the
Adaptation Progress Report.
Forestry
Woodland accounts for around 13% of total UK land area, which is below the EU average of 44%.
Coverage has fallen, reflecting a 20-year reduction in tree planting rates, which by 2010 had declined
by 85% compared to levels in 1989. On this basis, we recommended that the rate of tree planting
should be increased by an additional 10,000 hectares annually between 2015 and 2030 (or 20,000 ha/
pa in total) in order to deliver 1 MtCO2 of carbon savings by 2030.
England and the DAs have all set out plans to increase woodland creation which, if achieved, would be
close to our recommendation. Progress to date however, has been short of the ambition, with UK tree
planting rates reaching 10,300 hectares in the year to end March 2015. Consideration is needed about
whether the balance of effort between each country’s contribution towards meeting the overall UK
ambition remains appropriate.
Although there are schemes in place that could provide some momentum (Box 5.3), it is essential
that England and the DAs put in place plans to meet the targets. The plans should take into account
the type of trees being planted given future climate conditions (see the Adaptation Progress Report).
In contrast to the DAs, England is committed to private sector investment delivering the ambition.
However, there is still an important role for Government to play as an enabler and Defra should be
developing work on this (e.g. on new ways to encourage growth and addressing barriers).
Chapter 5: Progress reducing emissions from agriculture 163
1
Box 5.3. Woodland creation and preservation schemes
While Pillar II of the Common Agricultural Policy (CAP) is an important source of finance for the creation of woodland
cover for England and the DAs, there are also a number of other schemes looking to support more tree planting and
forest management:
• Rural Development Programme (RDP) funding: Under Pillar II of the CAP, funding under the RDP (2014-2020)
for England will be provided for the planting of 14,000 hectares of woodland. Similar incentives also exist in each of
the DA’s Rural Development Programmes. For example, in Northern Ireland, the RDP will fund up to five hectares
of woodland expansion as part of the Environmental Farming Scheme. In Scotland, livestock farmers will receive a
grant of up to £3,600 per hectare to plant up to 400 trees per hectare on sheep grazing land, while still being able
to receive Pillar I payments.
• Durham pilot study: One of the barriers identified by landowners is the perceived regulatory burden associated
with obtaining permission for planting more than five hectares of woodland (or more than two hectares in
sensitive landscape). The Durham pilot will explore whether the framework regulating woodland creation can
be improved by, for example, clarifying where a full Environmental Statement is required. The project will include
identifying appropriate areas for large-scale woodland creation in the country, where there is likely to be less
significant environmental impact (and an opportunity for a positive impact) if UK Forestry Standard requirements
are adhered to. The project is expected to conclude later this year, and could result in non-legislative changes to
the regulatory framework.
• ‘Grown in Britain’ was established in 2013 to increase British timber production and supply. It aims to stimulate
the market for British timber, and to encourage investment in woodland creation and management schemes. By
creating market-led demand for British timber, it aims to increase the amount of woodland in management and to
help protect the wider environment.
• ‘Roots to prosperity’ is an action plan for the growth and development of the forestry sector in northern England
and is supported by a broad range of industry and public sector stakeholders. It aims to promote good forestry
management, increase timber supply and promote economic growth.
Source: Defra, http://www.growninbritain.org/, Confor
Peat for horticultural use
The use of peat for horticultural purposes is the main driver behind the extraction of lowland peat in
the UK. In 2013 peat extraction accounted for 0.3 MtCO2e. Defra is committed to a voluntary phase out
of its use in the horticulture sector in England by 2030. This will also cover imports, which account for
around two-thirds of peat demand.
This ambition is being overseen by the Growing Media Panel, which was established in 2013. Defra has
been working with industry to develop a tool to inform the environmental sustainability of growing
media ingredients, which are alternatives to peat. The tool will assess, amongst other things, the
energy use, water use, and habitat and biodiversity of the raw material of the peat alternative to ensure
that reducing peat use in horticulture does not lead to an increase in the use of other raw materials
that are less responsibly sourced.
The policy will be reviewed in the second half of this year to assess whether the target remains
appropriate.
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Upland peat and peat restoration
In last year’s Progress Report, we recommended that the LULUCF inventory should include net
emissions from uplands and all lowland peatlands, and that policy be strengthened to encourage
further restoration. We welcome progress on this:
• Defra is currently reviewing the draft final results of a five-year project on how best to restore
drained blanket bog peat in the uplands to achieve the biggest emissions impact by maximising
CO2 sequestration and reducing methane loss. The final results will be published later this year.
• Defra, in partnership with the International Union of Conservation Nature (ICUN), is developing a
Peatland Carbon Code, which is a voluntary standard for peatland restoration (Box 5.4). The CCC
Adaptation Sub-Committee in its 2013 report3 identified the development of such a code as a key
priority to deliver additional private investment in restorative measures.
• Natural England has been working with key landowners to produce a blanket bog restoration
strategy. This aims to develop a common understanding and shared commitment amongst
landowners, statutory bodies, and wildlife charities, to achieve blanket bog restoration that delivers
multiple outcomes (see Chapter 6 of the Adaptation Progress Report for more detail).
Box 5.4. The Peatland Carbon Code
The UK Peatland Carbon Code is designed to encourage private investment in the restoration of degraded peatlands
by addressing the financial barriers to land managers, both in terms of the capital outlay and forgone revenue from
existing activities. One such activity is commercial grouse shooting, whereby the burning of moorland heather to
create the best conditions for the birds has the effect of drying out the top layer of the peat resulting in carbon losses.
The Code is currently in draft format:
• A two-year pilot stage was launched in 2013 by the ICUN, and it is likely to conclude later this year with an
independent evaluation before next steps can be agreed. The focus of the pilot has been on refining the code and
the evidence base in addition to piloting the processes involved.
• Guidance is being developed on quantifying the climate and other benefits (e.g. water quality and biodiversity) of
restoration, which will be published later this year.
• It is intended that the Code will eventually attract private companies to invest in restoration while contributing
towards corporate social responsibility objectives. Feedback from potential sponsors and those with potential
restoration sites have been sought during the pilot in order to ascertain the level of interest.
Source: ICUN UK
3
CCC (2013) Adaptation Sub-Committee Progress Report.
Chapter 5: Progress reducing emissions from agriculture 165
1
6.Summary
The current industry-led approach to reducing emissions in the agriculture sector relies heavily on
behaviour change, which also delivers cost-savings to the farmer. However, low-carbon investment and
the development of future options and innovation will be needed for deeper reductions in emissions
associated with our longer term cost-effective path.
• Low-carbon investment. The shift to a more sustainable agriculture system will require investment
in a range of new equipment, buildings and processes, which is already being undertaken by
the private sector. The support provided by FiTs for on-farm anaerobic digestion and the grants
provided through the Countryside Productivity Scheme are welcomed. We are currently updating
the agriculture sector Marginal Abatement Cost Curves (MACC) which will highlight cost-effective
investments that could deliver further abatement. In the forestry sector, investment will be required
to address financial barriers to woodland creation. For example, the UK Woodland Carbon Code
enables landowners to recover the costs of planting trees by receiving up-front payment from
participating businesses.
• Developing future options and innovation. Innovation and R&D around more resilient crops,
animal health, better breeding programmes and new generation farming practices will be needed
to deliver a more sustainable agricultural system in the future. The Agri-tech strategy will play a key
role in driving innovation in this sector, which government should closely monitor and evaluate.
In addition, work on updating the MACC will provide a qualitative assessment of further options
beyond the fifth carbon budget up to 2050
• Low-carbon choices. The current approach to delivering emission reductions in agriculture
through the GHG Action Plan relies heavily on farmers adopting more efficient and sustainable
agricultural practices (e.g. efficient use of fertiliser). The Centres for Agricultural Innovation currently
being funded by Government will help disseminate information about best practice and could
also help drive more sustainable agricultural practices. In the longer-term, changes in consumer
behaviour (e.g. diet change and waste reduction) will be important for delivering further emissions
reduction in agriculture.
The agriculture sector will represent an increasing proportion of total emissions as other sectors
decarbonise more quickly. Achieving emissions reduction will become more important for
contributing towards carbon budgets. It is therefore imperative that work to roll-out the Smart
Iinventory next year is not delayed any further in order to improve the accuracy in measuring emissions
and the abatement potential from current farming practices. Reducing emissions will also deliver a
range of co-benefits to the natural environment and agriculture as we adapt to a changing climate.
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1
Chapter 5: Progress reducing emissions from agriculture 167
Chapter 6: Progress reducing
emissions from waste and F-gases
1.Waste and F-gas emission trends
and drivers
2.Opportunities to reduce waste
and F-gas emissions
3.Policy progress
4.Summary
Key messages and recommendations
Waste and F-gas emissions account for 7% of total UK greenhouse gases. Waste emissions are
predominantly methane emissions which arise due to the decomposition of biodegradable
waste in landfill sites in the absence of oxygen. F-gases are used in various applications, mainly as
coolants in air conditioning and refrigeration, and are typically released through leakage.
Waste and F-gas emission data lags other sectors by a year due to the longer time required to
collate non-CO2 emissions data. In this chapter, we assess waste and F-gas emissions over the
period 2009-2012, 2013 outturn data, as well as policy progress to unlock abatement potential.
Waste management is a devolved issue, with England and each of the devolved administrations
developing waste strategies and legislating waste measures. We assess the waste policy progress to
date for each UK nation.
Waste emissions
• Waste emissions decreased by 14% in 2013, following an annual average 10% decrease over the
period 2009-2012. In total, waste emissions fell by 67% from 1990 to 2013. These reductions have
mainly been due to reduced biological waste going to landfill, investment in methane capture
technology and improved management at landfill sites.
• There is further abatement potential by reducing waste throughout the supply chain,
preventing biological waste going to landfill, ensuring that this can be diverted to be used in
productive ways (e.g. anaerobic digestion units) and increasing methane capture at landfill sites.
1
F-gas emissions
• F-gas emissions fell by 0.1% in 2013, following an annual average increase of 2% over the period
2009-2012. This deceleration in growth is most likely due to the impact of EU regulation.
• The new 2015 EU F-gas regulation aims to cut HFCs by 71% in 2030, ban on the use of certain
F-gases in specific applications and strengthen leakage checking.
Our key recommendations for Defra and the devolved administrations are:
Ahead of 2016 Progress Report
• Find opportunities to exceed regulatory minimums on F-gas abatement: including clearly
assessing and addressing barriers where evidence suggests cost-effective abatement above
minimum standards.
Ahead of 2017 Progress Report
• Scotland, England, Wales and Northern Ireland to set out approaches to increase methane
capture rates: as a devolved matter, each nation should set out specific actions and clear
milestones.
• Reduce biodegradable waste to landfill: each nation should set out specific actions and clear
milestones – including England – to further reduce biodegradable waste to landfill.
Chapter 6: Progress reducing emissions from waste and F-gases
169
We set out the analysis that underpins these conclusions in four sections.
1. Waste and F-gas emission trends and drivers
2. Opportunities to reduce waste and F-gas emissions
3. Policy progress
4. Summary
1.
Waste and F-gas emission trends and drivers
Waste and F-gas emission data lags other sectors by a year, due to the longer time required to collate
non-CO2 emissions data. In this chapter, we focus on the latest information which shows that waste
and F-gas emissions totalled 40 MtCO2e in 2013, accounting for over 7% of total UK greenhouse gas
(GHG) emissions.
(a) Waste emission trends
Waste emission estimates in the inventory have changed significantly over recent years, in particular in
relation to the amount of biodegradable waste going to landfill and levels of methane capture
(Box 6.1). As a result, the emissions reported here cannot be easily compared with those reported in
our 2014 Progress Report.
Waste emissions were 23 MtCO2e in 2013 and accounted for almost 4% of total UK GHG emissions.
Waste emissions are predominantly methane emissions which arise due to the decomposition of
biodegradable waste in landfill sites in the absence of oxygen. Emissions also arise due to wastewater
treatment, biological treatment and incineration of wastes.
Waste emissions fell by 14% in 2013, following an annual average 10% decrease over the period 20092012. Waste emissions have fallen by 67% since 1990 (Figure 6.1). These reductions have almost entirely
come from declining methane emissions from landfill:
• Landfill emissions. 74% of waste emissions and are entirely methane. Landfill emissions fell by 19%
in 2013, following an annual average 13% decrease over the period 2009-2012. This fall has been due
to reductions in biodegradable waste going to landfill, investment in methane capture technology
and improved management at landfill sites (Box 6.1)
• Wastewater treatment emissions. 19% of waste emissions and are mainly methane with some
nitrous oxide (N2O). Wastewater treatment emissions have remained broadly flat over 2009-2013.
• Biological treatment emissions. 6% of waste emissions and are a mixture of methane and nitrous
oxide from composting and anaerobic digestion. Biological treatment emissions increased by 6% in
2013, following an annual average 6% increase over the period 2009-2012.
• Incineration (without energy recovery) emissions. 1% of waste emissions and are mainly CO2.
Incineration emissions increased by 1%, following an annual average 3% decrease over the period
2009-2012.
Given their dominance, we focus on methane emissions from landfill.
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Figure 6.1. GHG emissions from waste by source (1990-2013, MtCO2e)
80
70
60
Wastewater
treatment
Incineration
Biological
treatment
Landfill
MtCO2e
50
40
30
20
10
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2013
Source: NAEI GHG inventory
Waste emission drivers – methane from landfill
Landfill methane emissions are not directly measured, but calculated based on: the quantity of
biodegradable waste sent to landfill, assumptions on the properties of waste streams such as methane
yield and decay rates1, and the amount of methane captured at landfill sites:
• Biodegradable waste. Waste Reduction Action Programme (WRAP) data suggests that avoidable
household food and drink waste has fallen by 15% between 2007 and 2012, from 8.3 to 7 million
tonnes.2 Reductions in waste have been driven by waste prevention and resource efficiency
campaigns at local level, voluntary responsibility deals and the recession.
• Biodegradable waste sent to landfill. Estimates suggest that the amount of landfilled
biodegradable waste reduced by 3% in 2013, following an annual average 7% decrease over the
period 2009-2012. Biodegradable waste sent to landfill in 2013 has fallen by 70% since 1990 (Figure
B6.1).
• Methane yield and decay rate. There is an imperfect understanding of the amount of methane
emitted from various waste streams and over how many years it is emitted. Field and experimental
observations exhibit wide variation (reflecting differences in how materials are mixed together,
which affects moisture content and access of waste streams to oxygen). The yield and decay rate
are also affected by real landfill conditions, which differ between and within sites. The Government
has estimated that uncertainties over methane yield and decay rates mean that methane emissions
from landfill could be 70% greater or lower than currently recorded in the inventory.
• Methane captured at landfill sites. The proportion of methane that is flared to CO2 or used for
energy generation, rather than emitted is estimated to average 61% in 2013, rising from 45% in 2009
(Figure B6.1).
Overall, estimated landfill methane emissions have fallen by 74% between 1990 and 2013.
1
2
Quantity of methane emitted and over how many years the as different types of waste degrade.
Household Food and Drink Waste in the United Kingdom 2012. Available at: http://www.wrap.org.uk/
Chapter 6: Progress reducing emissions from waste and F-gases 171
1
Box 6.1. Biodegradable waste, proportion of methane captured at landfill sites and methane emissions from
landfill (1990-2013)
Defra has recently published the results of several studies to improve the accuracy of emissions estimates, including
the proportion of biological waste going to landfill, the decomposition rates of waste streams and methane emissions
from landfill.
The main factors that have affected historic methane landfill emissions are:
• Landfill gas combustion in flares based on site-specific data only. Based on a UNFCCC requirement to use
site-specific data only rather than estimated values. This has reduced the estimate of the collection of methane for
combustion in flares, and thus increased methane emissions from 1990.
• Increase in assumed gas engine efficiency from 1998 onwards. Based on Golder Associates ‘Review of
methane emissions modelling’, which found that landfill power generators have become more efficient over time
and thus consume less methane than previously assumed. This change has increased the estimate of methane
emissions from 1998.
• Increase in waste decomposition rates. Also based on the Golder review, this change raised landfill emissions up
to 2005, but has reduced them from 2007.
Defra is continuing to work on better measurement of methane emissions from landfill, in close collaboration with the
Environment Agency, Manchester University, and the Technical University of Denmark. This will lead to more robust
inventory modelling and present opportunities to improve management of landfill sites.
Figure B6.1. GHG Biodegradable waste, proportion of methane captured at landfill sites and methane
emissions from landfill (1990-2013)
Biodegradable waste sent to landfill
60
40
30
Landfill methane emissions
20
70
10
60
%
Landfill methane capture rate
50
MtCO2e
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
40
30
70
20
60
10
50
0
40
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Million tonnes
50
30
20
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
10
2014 estimate
2015 estimate
Source: National Atmospheric Emissions Inventory (NAEI), MELMod and DECC.
Notes: Biodegradable waste and landfill methane capture do not equal landfill methane emissions. Emissions also depend on methane yield from waste.
Source: NAEI GHG inventory, MELMod and DECC
Notes: Golder Associates (2014) Review of Methane Emissions Modelling. Available at: http://randd.defra.gov.uk/
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(b) F-gas emission trends
F-gas emissions were 17 MtCO2e in 2013 and accounted for 3% of total UK GHG emissions. The majority
of emissions were the result of gas leakage of HFCs used in refrigeration and air conditioning as a
substitute for ozone-depleting substances. Other F-gases are from diverse sources, such as the use of
metered dose inhalers, aerosols and fire-fighting equipment.
F-gas emissions arise from three types of fluorinated gases; hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulphur hexafluoride (SF6). They are emitted in very small amounts
but have high global warming potentials (between 140 and 23,900 times that of CO2) and long
atmospheric lifetimes.
• HFC emissions represent the largest proportion of F-gases (95%) and come mainly from
refrigeration and air conditioning products, aerosols and foams, metered dose inhalers and fire
extinguishers. HFCs are emitted during the manufacture, lifetime and disposal of these products.
• PFC emissions come mostly from electronics and sporting goods manufacture and as fugitive
emissions from halocarbon production.
• SF6 emissions result mainly from the use of electrical insulation, as well as other industrial activities,
such as magnesium casting, and military applications.
Between 1997 and 1999, emissions dropped significantly as abatement technologies were fitted at
production facilities (Figure 6.2). Since 2000, F-gases have been slowly rising again, mainly as a result of
increasing demand for air conditioning and refrigeration products.
F-gas emissions fell by 0.1% in 2013, following an annual average increase of 2% over the period 20092012. Changes in demand for refrigeration and air conditioning have been the main factors responsible
for these emission trends:
• Refrigeration emissions. The main source of F-gases increased by 1% in 2013, following an annual
average 4% increase over the period 2009-2012, driven by rising demand for refrigeration products.
The 2006 EU F-gas regulation is likely to be the main driver of this deceleration in emission growth
as it aims at replacing high GWP F-gases with lower GWP refrigerants and reducing the leakage.
• Mobile air conditioning (MAC) emissions. Fell by 4% in 2013, following an annual average 2%
decrease over the period 2009-2012. The EU Mobile Air Conditioning (MAC) directive is likely the
main reason for the reduction in emissions as it restricts the use of F-gases in new cars.
• Stationary air conditioning emissions. Rose by 7% in 2013, following an annual average 10%
increase over the period 2009-2012. This is mainly driven by increasing use, but these emissions are
covered under the new 2015 EU regulation to reduce F-gas emissions.
Overall, while the emissions from refrigeration and stationary air conditioning increased in 2013, the
growth has been lower than in previous years. This is likely to have been driven by EU regulation.
Chapter 6: Progress reducing emissions from waste and F-gases 173
1
Figure 6.2. GHG emissions from F-gases by source (1990-2013, MtCO2e)
30
Primary aluminuim
production
Magnesium cover gas
Halocarbons
Electronics, sporting goods
and solvents
Firefighting, foam
and other
Inhaler and aerosol
emissions
Stationary air
conditioning emissions
Mobile air conditioning
(MAC) emissions
Refrigeration emissions
25
MtCO2e
20
15
10
5
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Source: NAEI GHG inventory
2.
Opportunities to reduce waste and F-gas emissions
a. Opportunities to reduce waste emissions
In our 2012 Progress Report we discussed in detail the potential opportunities to reduce waste
emissions. Due to their potent greenhouse gas impact, opportunities focus on reducing methane
emissions from landfill:
• Waste prevention. Emissions can be further reduced through waste prevention, which also offers
substantial upstream environmental and economic gains associated with resource efficiency.
• Diversion of biodegradable waste from landfill. There is potential to go significantly further in
diverting biodegradable waste away from landfill and towards recycling, composting, anaerobic
digestion (AD), mechanical biological treatment (MBT), and incineration with energy recovery.
• Landfill methane capture. Methane capture at modern landfill sites is over 80% and can reach as
high as 90%. These sites will play a bigger role as legacy emissions from older (and less efficient)
landfill sites decline.
Our indicators reflect scenarios where biodegradable waste sent to landfill is reduced at least in line
with the UK Government’s projections, and potentially reduced close to zero by 2020. This continues
the approach we first set out in our 2012 Progress Report (Table 6.1).
Biodegradable waste sent to landfill has fallen in line with our indicator and methane capture rates
have continued to rise (although from a different 2012 starting position, Table 6.1). We will review these
indicators in our Fifth Carbon Budget Advice later this year.
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Table 6.1. Progress against the Committee’s waste indicators (% change from 2007)
Budget 2
(2013-2017)
Budget 3
(2018-2022)
Budget 4
(2023-2027)
2013
indicative
2013
Outturn
Biodegradable waste to landfill
-38% to -84%
-39% to -97%
-39% to -97%
-32% to -41%
-45%
Methane captured at landfill
Rising above 2012 rate of 59%
61%
Source: Defra, CCC analysis
b. Opportunities to reduce F-gas emissions
In our 2014 Progress Report, we considered the potential for further reduction in remaining F-gases.
A 2010 AEA study for Defra showed evidence on lower GWP alternatives to HFCs.3 Some of these
alternatives are in development and some are already commercially available:
• Refrigeration and air conditioning can use existing hydrocarbons as well as CO2 and
Hydrofluoroolefins (HFOs) which are in development.
• Metered dose inhalers can in many cases be replaced with dry powder inhalers, which have been
a known technology for over 20 years and are widely used in some other countries.
• HFOs in aerosols, while not widely used in the UK, are already being used as a replacement for
HFCs in the EU, requiring small modifications to equipment only.
The new 2015 EU F-gas Regulation aims to cut HFCs by 71% by 2030, introduce new bans on the use of
certain F-gases in specific applications, and strengthen leak checking.
3.
Policy progress
(a) Policy progress to reduce waste emissions
Success in reducing landfill emissions has focused on reducing waste, diverting waste from landfill and
capturing the methane from landfill sites. Waste reduction has occurred through a combination of
information and voluntary programmes. Action is being taken at EU, national, devolved administration
and local authority levels. We briefly summarise each below.
EU Directives
The 1999 EU Landfill Directive required a 50% reduction in biodegradable municipal waste (BMW)
landfilled in the UK by 2013 relative to 1995 levels of BMW production, and requires a 65% reduction by
2020. Estimates for 2012 suggest that BMW sent to landfill has fallen by 71% against the baseline, and
so is currently outperforming the targets set. There are a number of other waste-related EU Directive
targets for which the UK also outperforming or in line to meet (Table 6.2).
3
AEA (2010) HFC consumption and emissions forecasting. Available at www.gov.uk.
Chapter 6: Progress reducing emissions from waste and F-gases 175
1
Table 6.2. EU Directive targets and UK performance to date
EU Directive
Target
UK 2012 progress
From 1995, 50% reduction by 2013
and 65% by 2020
71%
Recycling of waste from households
50% by 2020
44%
Recovery of non-hazardous construction and
demolition waste
70% by 2020
87%
Recycling or recovery of packaging waste
60% by 2012
69%
Biodegradable municipal waste landfilled
Source: Defra
In our 2014 Progress Report, we discussed the EU Commission’s plan to present a comprehensive
review of waste-related directives and a single coherent framework through to 2030, aimed at turning
Europe into a more circular economy. 4 It had an aim to create half a million new jobs, while making
Europe more competitive and reducing demand for costly scarce resources. The plan was expected
to include targets to recycle 70% of municipal waste and 80% of packaging waste by 2030, and ban
recyclable waste in landfill as of 2025.
The Commission has decided not to proceed with these plans. Instead, it now intends to present a
new, more ambitious circular economy package late in 2015 which will aim at transforming Europe into
a more competitive resource-efficient economy, addressing a range of economic sectors, including
waste. We will monitor developments and report on the package in our 2016 Progress Report.
National waste emission policies
Waste management is a devolved issue, with England and each of the devolved administrations
developing waste strategies and legislating waste measures. We first consider progress in policies
affecting the whole of the UK, then progress for the individual nations against the devolved targets
(Table 6.3).
UK-wide policy
In order to achieve current targets under the EU Directive, the UK introduced the Landfill Tax in 1996.
This imposes a charge on landfill operators for each tonne of waste landfilled, creating an incentive
to reduce the waste sent to landfill either through waste prevention or diverting waste to other
treatments (recycling, composting, recovery, and reuse). The tax has been increased from its initial rate
of £7 per tonne in 1996 to £82.60/t in 2015/16. As of April 2015, Scotland has acquired responsibility for
setting its own landfill tax and Wales will follow in 2018.
There are a number of voluntary programmes aimed at reducing packaging and food waste managed
by Waste & Resources Action Programme (WRAP), which has set a number of targets to reduce waste
both in food production, groceries and household use. While not all targets have been met, there has
been overall success in many of the programmes (Box 6.2).
4
176
A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value
from them whilst in use, then recover and regenerate products and materials at the end of each service life.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Box 6.2. Waste & Resources Action Programme (WRAP)
WRAP is a registered charity that works with businesses, UK Governments and the EU to help deliver their policies on
waste prevention and resource efficiency:
• Love Food Hate Waste Programme. Encourages voluntary reductions in food waste in households. The
programme, introduced in 2007, has had good success on reducing avoidable household food waste by 21%,
saving UK consumers almost £13 billion over the five years to 2012.
• Courtauld Commitment. A set of voluntary responsibility deals to 2015 to improve resource efficiency in the
grocery retail sector by preventing supply chain, packaging and food waste.
– Progress to date has been positive, exceeding some targets and narrowly missing others despite growth in the
grocery sector. From 2005-2013, almost 3 million tonnes of waste has been prevented, with a monetary value of
£5 billion and saving over 7 MtCO2e. From 2013-2015, WRAP hopes to prevent an additional 1 billion tonnes of
waste, equating to 3 MtCO2e.
– WRAP has started preparing a new set of agreements to reduce waste through to 2025 and will announce a
formal proposition in 2015.
• Hospitality and Food Service Agreement. Launched in 2012 with the aim to:
– Cut food and packaging waste by 5% by 2015. In 2013, there had been a cut of 2.5%.
– Increase food and packaging waste that is being recycled, sent to AD, or composted to 70% by 2015. In 2013,
this had increased by 7% points to 54%.
Source: http://www.wrap.org.uk/
1
Capture of methane at landfill sites has significantly increased from an average rate of 1% in 1990
to 61% in 2013 (Figure B6.2). This reflects investment driven by a combination of permit conditions
and financial incentives for capturing methane from landfill and anaerobic digestion (e.g. under the
Renewables Obligation, Feed-in-Tariffs, and Renewable Heat Incentive).
Later in 2015, we are expecting results from ACUMEN, a three year project to demonstrate technologies
and practices to increase methane emission capture in closed and historic landfill sites (Box 6.3).
Given the emission legacy of waste going to landfill, it is important to ensure this impact is minimised
through greater methane capture. We recommend widespread use and support for of greater capture
technology across the UK where cost-effective, based on results from project ACUMEN.
Chapter 6: Progress reducing emissions from waste and F-gases 177
Box 6.3. Project ACUMEN
ACUMEN is a partnership project funded by the EU, Defra and the other participating organisations, and staffed by the
Environment Agency, local councils and technology companies.
ACUMEN aims to demonstrate new techniques and technologies to improve the capture and use of methane from
closed and historic landfills.
The project is installing and operating a range of new techniques at demonstration landfills. The aim is to show
technologies that can work on the full range of closed landfills. The techniques demonstrated include small scale
gas engines (8 - 150 kilowatts), a novel low-calorific gas flare and an active biological oxidation technique. The six
demonstration sites range from 5 to 40 hectares in size, and between 20 and 50 years in age.
ACUMEN will also assess the costs and benefits of each demonstration project to see which options best suits certain
categories of closed landfill. The aim is to provide a range of techniques to landfill owners to help them assess the
options for managing methane at their sites and technical guidance in order to replicate the demonstrations at their
own landfills.
The project began in September 2012, and will finish in September 2015. We will report on findings from this project in
our 2016 Progress Report.
England
In our 2014 Progress Report, we reported the launch of the ‘Waste Prevention Programme’ (WPP) for
England to drive waste further up the waste hierarchy by helping businesses and households realise
cost savings through waste prevention and resource efficiency. Progress over the last year includes:
• In December 2014, Defra published a summary update of progress on the main government
actions set out in the WPP, which included 10 projects announced by WRAP receiving funding from
the ‘Innovation in Waste Prevention Fund’.5
• WRAP are also developing a web-based postcode locator to provide a practical tool to enable
householders to find their local re-use and repair services, and a household Waste Prevention Hub
for local authorities to help monitor the benefits of waste prevention activity.
However, while the WPP sets in place useful policies to support waste prevention and plans for
indicators, unlike the devolved administrations, there are no targets or milestones in England to
evaluate progress other than those from WRAP or EU Directives. There are also no further increases
planned for the landfill tax in real terms which may slow down progress on reducing landfill emissions.
Since our 2012 Progress Report we have recommended specific strategies to minimise biological waste
going to landfill and widespread separate food waste collection. According to a report by Eunomia,
there are net benefits from banning sorted biodegradable waste from landfill, such as paper/card. The
timing and sequencing of the bans is important in order to set up the adequate supply chains and
infrastructure.6 The Government has responded that priority should be placed on waste prevention
to reduce biodegradable waste sent to landfill, that it did not believe landfill bans were the best way
to achieve this goal, and it is for local authorities to decide on provision of separate collection of food
waste.7
5
6
7
178
Defra. Waste prevention programme for England “One year on” newsletter December 2014. Available at: https://www.gov.uk/
WRAP (2012) Landfill Bans: Feasibility Research: The environmental, economic and practical impacts of landfill bans or restrictions: research to determine feasibility.
Available at http://www.wrap.org.uk/
Meeting Carbon Budgets – 2014 Progress Report to Parliament. Government Response to the Sixth Annual Progress Report of the Committee on Climate Change. Available at:
https://www.gov.uk/
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
The Government’s 2011 ‘Anaerobic Digestion (AD) Strategy and Action Plan for England’ includes a £10
million loan fund to support new AD capacity, and an innovation fund to bring down costs of AD,
identify potential sources of waste feedstock, and develop markets for digestate (an AD by-product).
Since its launch in June 2011, the number of AD plants has increased from 54 to 140 plants by
September 2014. These measures are a positive step towards a long term and sustainable circular
economy. They need to feed into overall strategies for reducing methane emissions.
We recommend that Defra should publish, by early 2016: specific actions and clear milestones to
further reduce biodegradable waste to landfill and improve methane capture rates at landfill sites. We
will review action on this in our 2017 Progress Report.
Scotland
The Scottish Government launched Scotland’s first ‘Zero Waste Plan’ in June 2010. This includes a
number of policies and targets (Table 6.3):8
• Waste sent to landfill. Scotland’s proportion of waste going to landfill increased to 40% in 2012, and
so is not in line with plans to reduce the proportion to 5% by 2025. However, total waste collected
decreased in 2012, and the tonnage of waste sent to landfill fell by 3.5% to 4.5 million tonnes. From
2015, the Scottish Parliament will have new financial powers on disposals to landfill, following on
from the Landfill Tax (Scotland) Act 2014. The Scottish tax is set 10% higher than the UK rate for the
first three years.
• Food and other biodegradable waste. Scotland is planning to roll out separate food waste
collections from 2016 and implement a ban on biodegradable municipal waste going to landfill
by 2021.
• Household waste recycled, composted or reused. Scotland missed its 2013 interim target of
50%, with estimates suggesting that 43% of household waste was recycled, composted or reused.
However, 9 out of 32 of Scotland’s councils met the 50% target. There should be an improvement
in 2014 when new measures under the Waste (Scotland) Regulations 2012 were introduced. These
include bans for various materials sent to landfill from 2014, and requirements for councils to provide
recycling services to all households.
In the ‘Zero Waste Plan’, Scotland has set a plan to reduce the environmental impact of waste and move
towards a circular economy. We recommend that Scotland publish by early 2016: specific actions and
clear milestones on how it intends to meet its biodegradable municipal waste going to landfill targets
and improve methane capture rates. We will review action on this in our 2017 Progress Report
Wales
In Wales, the reduction in waste emissions follows the introduction of a number of levers encompassing
regulatory mechanisms, waste prevention and improvements at landfill. In June 2010, Wales published
‘Towards Zero Waste’, an overarching waste strategy, and set statutory targets for waste going to landfill
and recycling targets for municipal waste. The Welsh Government is aiming for a circular economy
approach to waste, with the aim that by 2050 nothing that could be recycled or re-used is sent to landfill:
• Municipal waste recycling. Wales met its 52% waste recycling 2012/13 target; in 2013/14 this rose to
54.3%. This was also the highest recycling figure in the UK and 4th in Europe.
• Landfill waste. The Landfill Gas Capture Climate Change Project has decreased emissions (3,400
tonnes of methane and over 60,000 tonnes of CO2 equivalent). As of 2018, Wales will acquire
8
Scotland’s Zero Waste Plan. Available at: http://www.gov.scot/
Chapter 6: Progress reducing emissions from waste and F-gases 179
responsibility for setting its own landfill tax and there is an aspiration for no additional municipal
waste landfilled from 2025 as an interim step to zero waste by 2050.
• Food waste collection. Data collected from WRAP indicates that 99% of households in Wales now
have a separate food waste collection service provided by their local authority, compared to a UK
average of 49%.
There are several examples of how Wales’ approach to waste has been successful (Box 6.4). This has
been helped by continued support groups of local authorities that are working together through
the Waste Infrastructure Programme to develop sustainable long term solutions for food waste
management and residual (black bag) waste management.
We recommend that Wales should publish by early 2016; specific actions and clear milestones to
further reduce biodegradable waste to landfill and improve methane capture rates at landfill sites. We
will review action on this in our 2017 Progress Report.
Box 6.4. Successes in Wales’ approaches to waste
In Swansea, the number of black bags placed out for collection around the city has reduced more than 25% in 12
months. The reduction has been achieved following the introduction of a three-bag limit, ‘Keep it to 3’, by Swansea
Council in April 2014. Recycling rates for 2013/14 were 52.8%, up nearly five percentage points from the previous year.
Bridgend was the second worst Welsh local authority for recycling in 2010/11 with 31% of waste recycled. However, it
is now in the top six with 56.5% of waste recycled in 2013/14. The change was due to an overhaul in its waste strategy:
who runs the service locally, how materials are collected and recycled, and what residents have to do. Residents are
given two black boxes and a hessian bag for items to recycle and a brown container for food waste. Recycling is
collected every week and other residual waste on a fortnight basis. The scheme is saving the council more than £1
million a year, not including the savings in reduced waste sent to landfill..
Northern Ireland
The ‘Northern Ireland Waste Management Strategy’ was published in December 2013 and set various
additional targets alongside Waste Regulations (Northern Ireland) 2011:
• Food Waste Regulations. These came into force in February 2015, banning landfilling of food waste
once collected. The regulations provide for the separate collection and subsequent treatment of
food waste and require district councils to provide food waste bins for households. It also places a
duty on food businesses from producing in excess of 5kg of food waste per week.
• Household recycling/reuse. A target of 50% by 2020, with a proposal to increase the rate to 60%.
Progress has been made with a ban on food waste going to landfill and targets for waste/material
recycling and recovery across the economy. We recommend that Northern Ireland should publish by
early 2016: specific actions and clear milestones to further reduce biodegradable waste to landfill and
improve methane capture rates at landfill sites. We also recommend that Northern Ireland evaluate the
impact of the food waste ban. We will review action on this in our 2017 Progress Report.
180
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Table 6.3. Waste targets and progress
Devolved
Administration
Targets
Progress
On track
Scotland
Reduce waste arising by 7% by 2017 and 15%
by 2025 against 2011 baseline
In 2012 total waste arising fell by 14%
Yes
70 % of household waste to be recycled/
composted/reused by 2025, with interim
targets for 2013 (50%) and 2020 (60%)
42% in 2013
No
Recycling 70% of all waste (including
commercial and industrial) by 2025
41.5% in 2012
Yes
Reducing the proportion of total waste sent
to landfill to a maximum of 5% of all waste
by 2025
In 2012 40% waste sent to landfill,
up 5% points from 2011
No
Municipal waste recycling targets for local
authorities:
52.3% in 2012/13
Yes
Wales
54.3% in 2013/14
2012/13 – 52%
2015/16 – 58%
2019/20 – 64%
2024/25 – 70%
27% reduction in waste by 2025 compared to
2006/7, “zero waste” by 2050 i.e. prevented,
reused or recycled/composted.
1% reduction in commercial waste
by 2012/13
1
Yes
5.5% increase in industrial waste by
2012/13
14% reduction in household waste
by 2012/13
Northern Ireland
Construction and demolition waste re-use,
recycling and recovery - 90% by 2025
87% in 2012
Yes
Household waste recycled/recovered:
40.6% in 2013/14
Yes
2015 – 45%
2020 – 50%
90% of construction and demolition wastes
to be subject to material recovery by 2020
Source: SEPA (2014), Welsh Government (2014), NIEA (2015).
(b) Policy progress to reduce F-gas emissions
Progress in the EU
Two EU policies are currently in place to reduce F-gas emissions: the Mobile Air Conditioning (MAC)
Directive and EU F-gas Regulation. While the former focuses on air conditioning in cars and vans, the
latter focuses on the cross-cutting use of F-gases:
• The MAC directive came into force in 2011. It prohibits the use of F-gases with a GWP more than 150
times higher than CO2 in air conditioning units in new types of cars and vans introduced from 2011
and in all new cars and vans produced from 2017.
Chapter 6: Progress reducing emissions from waste and F-gases 181
• The EU 2015 F-gas regulation replaced 2006 EU regulation and applies from 1 January 2015. This
regulation introduces a number of new measures together with strengthening of existing measures:
– It reduces the quantities of HFCs that producers and importers are allowed to place on the EU
market. The reduction starts with the initial cap in 2015 based on the annual average of the
quantities in the market between 2009 and 2012. Producers will receive maximum emission
quotas based on their previous performance. The allowed emissions will be reduced sequentially,
starting with a 7% cut in 2016 and reaching a 79% cut by 2030. Some HFCs applications are
exempted: use of HFCs in military equipment, semiconductor manufacturing sector, metered
dose inhalers and feedstock. These exemptions represented at least 5% of total UK HFCs
emissions in 2013.
– For new equipment, the regulation introduces a series of bans on the use of F-gases covering
cross-cutting areas. In addition to bans that were originally stated in 2006 regulation, new bans
include:
• Domestic refrigerators and freezers with GWP above 150 from 2015,
• Refrigerators and freezers for commercial use with GWP above 2,500, from 2020, followed by a
ban in 2022 for use of HFCs with GWP above 150,
• Air conditioning systems containing less than 3kg of refrigerant with GWP above 750, from
2025.
– For existing equipment, there is a ban on using HFCs with a GWP above 2,500 for the
maintenance and servicing of existing refrigeration equipment from 2020.
– There is some strengthening of existing obligations related to leak checking and repairs, F-gases
recovery and technician training.
The EU 2015 regulation focuses mainly on reducing GHG emissions from the use of HFCs with some
areas being exempted. The PFCs and SF6 gases are not subject to the phase out but are likely to be
affected by other parts of the regulation. As yet, it is not possible to assess the effect of the new
regulation on UK F-gas emissions. DECC is planning to model the impact later this year and we will
examine this further in our 2016 Progress Report.
Progress in the UK
The EU 2015 F-gas regulation has been in force since January 2015 as it is directly applicable in the UK.
The Government has consulted on a domestic statutory instrument that would allow the enforcement
and penalty provisions of the new regulation. This new enforcement regulation has been in force since
March 2015, including the following:
• Powers for customs officers to impound unlawfully imported material.
• Powers for the enforcement bodies, such as the Environment Agency, to issue compliance notices
for failure to comply with the requirements of the EU regulation.
• Appointment of the bodies which certify companies and train individuals to handle F-gases.
We will review the effectiveness of the regulation in future progress reports.
Some other countries in the EU have gone beyond the current legislation (Technical Annex 6). The UK
should examine where there are opportunities to find cost-effective abatement beyond the regulatory
minimums and pursue options to deliver that.
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4.Summary
(a) Waste
There has been good progress in reducing GHG emissions from wastes, with biodegradable waste
going to landfill reducing and new methane capturing technologies lessening its emission impact.
However, the biodegradable waste going to landfill today will still be emitting GHG emissions in years
to come. Action needs be taken at every step along the waste chain including prevention, recycling,
recovery, collection & disposal and landfill management.
Action is required in three key areas:
• Low-carbon investment. Investment in methane capturing technology has been one of the main
causes of the fall in emissions, stimulated by permit regulations and financial incentives. Waste can
be used as an energy source that can reduce demand for other fuels in other sectors. The number of
anaerobic digestion units has nearly tripled in the UK since 2011, and continued policy support is vital
to their growth. For biological waste already in landfill, the publication of project ACUMEN provides a
suitable point to consider future action to increase methane capture at closed landfill sites.
• Developing future options and innovation. Finding new ways to improve product design or
resource use within supply chains can prevent waste from occurring and save money for businesses
and households. Where waste is inevitable innovations, such as results of the three year study
in project ACUMEN and more detailed methane emission measurement, will improve landfill
management and reduce emissions.
• Low-carbon choices. Attitudes and behaviour towards resources and what we consider waste will
be essential to the innovation and investment highlighted above. They run all the way through
the waste hierarchy, in reusing resources where we can, separating and collecting for use in other
sectors, disposing as little as possible in landfill and then ensuring we minimise its environmental
impact.
(b) F-gases
Unlike other emissions, F-gases emissions have increased over the last 15 years. New EU regulation
on F-gases should reverse this trend over time. To ensure progress is made, action is needed in the
following areas:
• Low-carbon investment. The EU 2015 F-gas legislation will require new investment in sectors
affected by the phase down and new bans. For example, the European Commission (EC) impact
assessment found that:9
– The overall barrier preventing the switch to low-carbon technologies was the higher initial
investments needed.
– Looking at operators investing in new equipment, centralised systems of commercial
refrigeration would incur highest costs, followed by bus air conditioning systems and single-split
room air conditioning.
– As for companies servicing F-gas equipment, the use of low-GWP alternatives will likely require
initial investments in training as the new substances may be more flammable and used at higher
pressures.
9
European Commission Impact Assessment (2012). Available at http://ec.europa.eu/clima/policies/f-gas/legislation/documentation_en.htm
Chapter 6: Progress reducing emissions from waste and F-gases 183
1
• Developing future options and innovation. The new legislation could drive innovation of UK
F-gases producers in the areas of main focus, such as domestic and commercial refrigeration or
air conditioning (RAC) products:
– For instance, Denmark has introduced a series of taxes and bans on F-gases since 2000, resulting
in an overall fall in F-gas emissions coupled with a substantial increase in natural refrigerants in
RAC equipment.
– It is probable that the areas exempted from the phase-down (e.g. metered dose inhalers) will not
see sufficient levels of innovation in driving the GHG emissions down over the coming years.
• Low-carbon choices. The strengthening of obligations on leak checking, repairs, recovery and
training will need behavioural changes from those installing or servicing the equipment using
F-gases:
– The legislation requires employers to ensure employees are properly certified for leak checking,
installation, servicing or recovery of equipment.
– The use of alternative technologies using high pressure or flammable substances will need to
introduce new ways of maintaining the equipment.
– There appear to be significant cultural barriers around the use of natural refrigerants as
alternatives for F-gases.10 These include a lack of awareness and acceptance or misconceptions
about the natural refrigerants solutions.
Waste and F-gases are two relatively small sectors for GHG emissions. However, absolute emission
reductions may be easier and more cost effective than in some other sectors.
10 Shecco (2012). GUIDE 2012: Natural refrigerants – market growth for Europe. Available at http://guide.shecco.com/
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1
Chapter 6: Progress reducing emissions from waste and F-gases 185
Chapter 7: Devolved administrations
1. Emission trends and progress
towards targets
2. Power sector
3. Buildings
4. Industry
5. Transport
6. Agriculture and land use
7. Waste
8. Forward look
9. Summary
Key messages and recommendations
The devolved administrations have an important role to play in achieving the UK’s carbon budgets.
Emissions data broken down for each devolved administration is produced one year later than the
UK data. In this chapter we use the recently published data for 2013, unlike the rest of the Progress
Report which is based on 2014 data.
Emissions in Scotland, Wales and Northern Ireland account for 22% of UK emissions (9%, 9%, and
4% respectively in 2013, the latest year for which data is available), while they account for 16% of
the UK’s population and 13% of GDP.
They have each adopted their own ambitious targets for reducing emissions. Scotland has passed
its own Climate Change Act and has legislated annual targets, while in Wales and Northern Ireland
targets have been set by the devolved governments. In Wales, the proposed Environment Act
(2016) provides for reduction targets and carbon budgets.
They have (fully or partially) devolved powers1 in a number of areas relevant to carbon reductions,
with powers varying by nation. Key areas of devolved powers include transport demand-side
measures, energy efficiency, agriculture and land use, and waste. It is expected more powers will
be devolved. The devolved administrations also have an important role implementing UK policy
(such as renewable energy deployment2) through the provision of additional incentives and their
approach in areas such as planning consents.
1
The devolved administrations are often leading the UK with innovative policies and effective
implementation. Increasingly, examples of good practice and lessons about what works are being
shared among the UK nations.
In this chapter, we highlight progress towards emission reductions in each main sector and
highlight a number of areas of good practice.
Our key messages are:
Emissions:
• In 2013, emissions fell in Scotland by 3.8%, rose in Wales by 10.3% and remained approximately
unchanged in Northern Ireland, compared to a reduction of 2.4% across the UK. In Scotland,
emissions reduced in the power, transport and waste sectors. The large emissions increase in
Wales was primarily due to a 54% increase in emissions at the Port Talbot steelworks. However,
non-traded sector emissions, where the Welsh Government has more devolved powers,
decreased 1%.
• Scotland is leading the UK in emission reductions with a 35% reduction since 1990, compared to
12% in Wales, 16% in Northern Ireland and 30% at a UK level.
• The devolved administrations have their own targets to reduce emissions. Scotland, although
leading emission reductions, has failed to meet its first four statutory annual targets, which
have been set separately to the UK carbon budgets. Inventory changes beyond the Scottish
Government’s control have made the Scottish annual targets increasingly difficult to achieve
as they are set on an absolute basis. However, Scotland is on track to meet its target to reduce
emissions 42% by 2020. Wales’ progress to meeting a 40% reduction by 2020 and Northern
Ireland’s progress to meeting a 35% reduction by 2025 are currently falling short of the
reductions required.
1
2
Technical Annex 7 – Devolved administrations, Table 7.1.
Energy is completely devolved in Northern Ireland.
Chapter 7: Devolved administrations 187
Key messages and recommendations
Progress:
• In some policy areas the devolved administrations lead the UK with stronger targets and
additional allocated funding. This is particularly notable in residential energy efficiency and
programmes to reduce emissions from waste.
• Energy efficiency and fuel poverty: the devolved administrations operate tax-payer funded
schemes to tackle fuel poverty in addition to the supplier obligations. These often focus on
area-based delivery, working with local authorities.
• Waste: Ambitious household waste recycling targets have been set in the devolved
administrations. Wales met its target for 52% of household waste to be recycled in 2012/2013,
although Scotland missed its second, 50%, target in 2013. Northern Ireland is progressing
towards its 2015 target of 45%. By contrast, England does not have a target and recycled 44% of
waste in 2013.
• The devolved administrations are also making good progress in renewable electricity capacity,
accounting for 40% of the UK’s total capacity in 2014. However, progress in renewable heat
deployment is slow and targets are not being met.
Recommendations:
Stronger action will be required in key areas in order to meet future targets:
Scotland: The Committee produces a stand-alone annual Progress Report for the Scottish
Government based on extensive analysis of progress in Scotland against its own climate targets.3
The most recent report was published in March 2015 and included a number of recommendations.
The key recommendations were:
• Consider further action to facilitate heat networks: for example obliging local authorities
to connect to existing local networks and requiring consideration of network heat in new
developments.
• Evaluate current energy efficiency schemes: focus particularly on area-based schemes to
better understand the most effective way to implement supplier obligations once they become
devolved.
• Improve evidence on agricultural abatement: to include what has worked under “Farming for
a Better Climate” and whether its measures have been taken up beyond the focus farms.
Wales:
• Develop a heat strategy: build on UK evidence and approach to develop clear heat strategy for
Wales including a renewable heat target.
• Prepare for higher ambition required of industry: plan ways to reduce industry emissions,
including consideration of voluntary partnership agreements with industry4 and encouraging
innovative solutions.
3
4
5
188
CCC (2015) Reducing emissions in Scotland 2015 Progress Report http://www.theccc.org.uk/wp-content/uploads/2015/01/Scotland-report-v6-WEB.pdf
The Scottish Government has recently published a new heat strategy which we will examine in our March 2016 Progress Report.
Voluntary agreements are ways through which governments and an organisation can explore opportunities for reducing environment and heritage impacts in ways that create
prosperity and well-being.
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Key messages and recommendations
• Address non-financial barriers for electric vehicles: including further measures which
could be implemented such as parking, use of priority lanes, raising awareness and public
procurement.
• Meet tree planting targets: consider whether further measures are needed to ensure tree
planting targets are met, and develop approach jointly with stakeholders and other DAs.
Northern Ireland:
• Consider further action to facilitate heat networks: for example obliging local authorities
to connect to existing local networks and requiring consideration of network heat in new
developments.
• Improve monitoring of agricultural emissions: following Defra’s delivery of the Smart
inventory, put in place local monitoring and process for acting on its findings.
• Address non-financial barriers for electric vehicles: including further measures which
could be implemented such as parking, use of priority lanes, raising awareness and public
procurement.
1
We set out the analysis that underpins these points in 9 sections:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Emission trends and progress towards targets
Power sector
Buildings
Industry
Transport
Agriculture and land use
Waste
Forward look
Summary
Chapter 7: Devolved administrations 189
1. Emission trends and progress towards targets
The latest UK emissions data considered elsewhere in this report are for 2014, but the latest data
available for the devolved administrations are for 2013. We focus in this section on analysis of the
change in emissions from 2012 to 20136, as well as an overview of average annual emission changes
since the recession (2009-2013).
UK-wide, greenhouse gas emissions decreased 2.4% between 2012 and 2013, with an average decrease
of 1.0% per year between 2009 and 2013 (Overview Chapter). In the devolved administrations (Figure
7.1), Scottish emissions fell further in 2012 (3.8%) with an average decrease of 2% per year between
2009 and 2013, while Wales’ emissions increased (10.3%) with an average increase of 3% per year
between 2009 and 2013. Northern Ireland emissions remained broadly the same (a 0.05% increase).
Scotland, Wales and Northern Ireland account for 22% of UK emissions (9%, 9% and 4% respectively) in
2013 (Table 7.1) while they account for 16% of the UK’s population and 13% of GDP.
Figure 7.1. Greenhouse gas emissions in devolved administrations by sector (2012 and 2013)
60.0
Waste
Agriculture
50.0
Transport
Industry
40.0
MtCO2e
Non-residential buildings
30.0
Residential buildings
Power
20.0
Land use, land use
change and forestry
10.0
0.0
-10.0
2012
2013
Scotland
2012
2013
Wales
2012 2013
Northern Ireland
Source: NAEI (2015).
Note: Emissions are presented here before accounting for trading in the EU ETS, and do not include emissions from international aviation and shipping
In Scotland, total emissions fell to 50.6 MtCO2e due to a switch from coal to low-carbon fuels in power
generation. Emissions since 1990 have fallen 35.3%, the largest reduction in the UK. However, Scotland
missed its legislated target in 20137. Revisions to the inventory since the Scottish targets were set in
2010 have made achieving the annual targets more challenging. In 2013:
– There were strong falls in emissions from the waste (15.7%) and power (10.8%) sectors, whilst the
emissions sink from land use, land use change and forestry (LULUCF) increased by 3.4% .
– There were increases in emissions in non-residential buildings (3.3%), and small increases in
industry (0.1%) and agriculture (0.3%).
– Scotland’s targets are set on a net basis- taking gross emissions (including international aviation
and shipping) and then adjusting to take account of sales and purchases in the EU ETS. For 2013,
the Scottish target was 47.976 MtCO2e compared to a Net Scottish Emissions Account of 49.7
MtCO2e. As a result, Scotland missed its legislated annual target for the fourth successive year.
6
7
190
Unless stated emissions data do not account for trading in the EU ETS and do not include emissions from international aviation and shipping.
Scotland’s targets account for trading in the EU ETS and include international aviation and shipping.
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– Scotland’s 42% reduction by 2020 target is within reach. In 2013, emissions (including international
aviation and shipping and adjusting for trading in EU ETS) reduced by 38.4% compared to 1990.
– The latest revisions to the inventory have added 5 MtCO2e to baseline emissions and 2 MtCO2e
to 2012 emissions, with at least that much in every other year since the baseline year. Although
emission estimates have been adjusted, the annual targets are absolute and fixed in legislation.
• In Wales, total emissions rose to 50.8 MtCO2e driven by a marked rise in emissions from industry
(27.9%) and power (8.4%). This reflected an increase in emissions from steelworks in Wales and a
change from gas to coal in power generation. However, non-traded sector emissions, where the
Welsh Government has more devolved powers, decreased 1% in 2013. Wales has set an annual
emission reduction targets and a 2020 reduction target which is now more challenging to achieve:
– Wales has a target to reduce greenhouse gas emissions by 40% from 1990 levels by 2020. In 2013,
emissions were 12% lower than in 1990 (compared to 30% for the UK). On the basis of progress
to date, the 40% target by 2020 is likely to be missed. There has been significant progress across
a number of sectors (e.g. waste and non-residential buildings) but emissions from the power
sector have increased by 42% since 1990. This partly reflects the importance of individual power
and industry installations at a devolved level (e.g. changes in production at Tata Steelworks in
Port Talbot can have a large impact on emissions in Wales).
– Wales has a cumulative target to reduce annual emissions by 3% (against 2006-2010 baseline) in
areas of devolved responsibility: transport, resource efficiency and waste, business, residential,
agriculture and related land use, and public sector. In 2012 (the second target year), Wales
achieved a 10% reduction against the baseline. Even though overall greenhouse gas emissions
increased in 2013, this target is likely to have been achieved again given the reduction in nontraded sector emissions in 2013 and given the out performance against the 2012 target. The
Welsh Government will publish its assessment of performance in 2013 later in 2015.
• In Northern Ireland, emissions in 2013 remained around the same as 2012 levels (a slight 0.05%
increase). Northern Ireland’s emission reduction target is lower than the Scottish and Welsh targets,
reflecting the larger share of emission from difficult to reduce sectors (in particular agriculture).
– Emissions in 2013 were 22.4 MtCO2e. Emissions rose in the power (4.7%), residential (3.0%) and
industry (3.2%) sectors reflecting an increased demand for heating with colder temperatures at
the beginning of the year and a switch from gas to coal for power generation.
– Emissions fell in the waste (13.3%), non-residential buildings (5.2%), and transport (1.2%) sectors.
The land use, land use change and forestry (LULUCF) sector, which is a net emitter in Northern
Ireland, has also decreased by 7.2% since 2012.
– Northern Ireland has a target to reduce emissions by at least 35% compared to 1990 levels by
2025. In 2013, emissions in Northern Ireland were 16% below their 1990 levels. According to
projections of emissions from the Northern Ireland Executive, this progress is falling short of what
is required in order to meet the 2025 target.
Overall, emissions rose 2.3% collectively in the devolved administrations in 2013. The differing rates
of reduction and rises across the countries in part reflect the relative importance of different sectors
(Figure 7.2) at the devolved level.
Emissions fell sharply for the UK as a whole in 2014 (Overview Chapter). Data for the devolved
administrations are not yet available, but the trends in other areas (e.g. above average temperatures,
increase in use of renewables, roll-out of energy efficiency, and GDP growth) suggest the reduction in
emissions is likely to be similar in the nations.
Chapter 7: Devolved administrations 191
1
Table 7.1. Devolved administrations’ emission targets and progress
Scotland
Targets/milestones –
reductions from 1990
baseline
% of UK
emissions
Emissions change
1990-2013
Average annual
emission change
2009-2013
42% by 2020 (inc. IA&S)
9%
35.3% reduction
2% reduction
38.4% reduction including
International aviation and
shipping and accounting
for EU ETS
Wales
40% by 2020
9%
12.1% reduction
3% increase
Northern Ireland
35% by 2025
4%
16.0% reduction
0%
UK
34% by 2020
-
30.2% reduction
1% reduction
Source: NAEI (2015)
Note: The latest UK emissions data considered elsewhere in this report are for 2014, but the latest data available for the devolved administrations are for 2013. This
data (unless stated) does not account for trading in the EU ETS and does not include international aviation and shipping.
Figure 7.2. Greenhouse gas emissions in the devolved administrations by sector contributions (2013)
120%
Waste
Land use, land use
change, and forestry
100%
Agriculture
80%
Transport
60%
Industry
40%
Non-residential buildings
Residential buildings
20%
Power
0%
UK
Scotland
Wales
Northern Ireland
-20%
Source: DECC (2014).
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2. Power sector
(a) Emissions and electricity generation trends
Power sector emissions fell in Scotland in 2013, in line with a fall in England and the UK as a whole, but
rose in Wales and Northern Ireland (Figure 7.3) due to changes in the fuel mix (Figure 7.4).
• In Scotland, emissions fell 10.8% in 2013 with an average annual decrease of 3.1% between 2009
and 2013. Power sector emissions account for 23% of total Scottish emissions. They have fallen 23%
since 1990 levels.
• In Wales, emissions rose 8.4% with an average annual rise of 7.2% between 2009 and 2013. Power
sector emissions account for 32% of total Welsh emissions, and are 42% higher than 1990 levels.
• In Northern Ireland, emissions rose 4.7% with an average annual rise of 1.9% between 2009 and
2013; however emissions are 24% less than 1990 levels. The sector accounts for a 13% share of total
Northern Irish emissions.
Figure 7.3. Power sector emissions in Scotland, Wales and Northern Ireland (1990-2013)
25.0
Scotland
Wales
Northern Ireland
20.0
1
MtCO2e
15.0
10.0
5.0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0.0
Source: NAEI (2015).
Note: No inventory data are available for devolved adminstrations for 1991-1994 or 1996-1997
Table 7.2 highlights the changes to emissions and power generation between 2012 and 2013. Emissions
fell in Scotland despite generation increasing 5%. This is due to a decrease in carbon-intensive fuels for
generation such as coal (9% fall), with the closure of Cockenzie power-station in early 2013, and a rise in
renewables (16%) and nuclear (8%).
In Wales and Northern Ireland, there was a rise (9% and 30% respectively) in renewable generation.
However, there were also increases (6% and 10% respectively) in coal generation, perhaps reflecting
fuel-switching due to increased gas prices and reduced coal prices. Coal is now the main fuel used to
generate electricity in Wales.
Chapter 7: Devolved administrations 193
Figure 7.4. Proportion of generation by fuel type in Scotland, Wales and Northern Ireland (2012 and 2013)
100
Other thermal
%
90
80
Wastes
Hydro pumped storage
70
Renewables
60
Nuclear
Gas
50
Oil
40
Coal
30
20
10
0
2012
2013
2012
Scotland
2013
Wales
2012
2013
Northern Ireland
Source: DECC (2014).
Table 7.2. Power sector emission and generation changes (2012-2013)
DA
Emissions
Overall
electricity
generation
Renewable
generation
Nuclear
generation
Coal
generation
Gas
generation
Scotland
-11%
+ 5%
+ 2.4 TWh
(16%)
+ 1.5 TWh
(8%)
- 1 TWh(-9%)
- 0.2 TWh
(-3%)
Wales
+8%
- 1%
+ 0.2 TWh
(9%)
+ 0.2 TWh
(4%)
+ 0.7 TWh
(6%)
- 1.3 TWh
(-21%)
Northern Ireland
+5%
+ 5%
+ 0.4 TWh
(30%)
N/A
+ 0.2 TWh
(10%)
- 0.2 TWh
(-5%)
Source: NAEI (2015), DECC (2014)
At the UK level, emissions fell 7% in the power sector between 2012 and 2013, with an average annual
decrease of 0.6% between 2009 and 2013. This reflects a fall in demand for electricity and a reduction
in the carbon intensity of electricity supply. While Scotland saw a stronger fall in emissions than at the
UK level, the increase in emissions from the power sector in Wales and Northern Ireland was in contrast
to the UK trends. This highlights the larger impact of individual installations at the devolved level, with
the closure or change in production of one plant able to significantly affect the overall picture.
(b) Progress and policy on renewable electricity
There has been ongoing progress in the deployment of renewable electricity across the devolved
administrations (Figure 7.5), which in 2014 together accounted for 40% of UK renewables capacity. The
devolved administrations each have targets or milestones for renewables (Table 7.3):
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Table 7.3. Renewables targets and progress
DA
Renewables target
Progress in 2014
On track
Scotland
Equivalent of at least 100% of gross
electricity consumption to be
delivered from renewables by 2020.
7.2 GW installed capacity, 10% increase
from 2013.
Yes
Aspiration totalling 22.5 GW of
installed capacity from different
renewable energy technologies by
2020/20257
1.8 GW installed capacity, 53% increase
from 2013.
Wales
Generation from renewables was
equivalent to 49.6% of Scotland’s gross
electricity consumption. This was
an increase from 44.4% in 2013 and
means the 2015 interim target of 50%
is very likely to be met. In 2014, Scottish
generation accounted for 30% of total UK
generation.
In 2014 generation from renewables was
3,400 GWh, a 29% increase from 2013.
Technical Advice Note (TAN) on
Renewable Energy 2005 target of 7,000
GWh per year by renewable electricity
by 2020.
Northern
Ireland
Meet 40% of electricity consumption
from renewable sources by 2020, with
interim targets for 20% in 2015.
Renewable
Energy
technologies
aspirations – not
on track.
TAN target – on
track.
0.8 GW installed capacity, 17% increase
from 2013.
Generation from renewables was
equivalent to 19.0% of Northern Ireland’s
gross electricity consumption in
2013/2014. This was an increase from 17%
in 2012/2013. The 2015 interim target is
likely to be met.
Currently yes,
however future
capacity looks
uncertain.
1
Source: DECC (2015), Scottish Government (2015), DETINI (2014).
Figure 7.5. Renewable deployment in the UK (2006-2014)
25
England
Northern Ireland
Wales
Scotland
20
GW
15
10
5
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: DECC (2015).
8
Welsh Government (2010) A Low Carbon Revolution http://www.mng.org.uk/gh/resources/100315energystatementen.pdf
Chapter 7: Devolved administrations 195
• In Scotland, the Government is on track to meet its 2020 target. The average rate of deployment
from 2015 onwards will need to increase to 1.4GW per year to bring the total capacity to between
14 and 16 GW. This is higher than the maximum achieved in any year to date. However, if the
projects which are currently under construction or consented (8.9 GW) are built, then this capacity
will be achieved and the target met.
Alongside the Renewables Obligation (RO) and Contracts for Difference (CfD), (Chapter 1) Scotland
has additional smaller-scale instruments to finance renewable projects which contribute to meeting
renewable targets. These include the Renewable Energy Infrastructure and Innovation Fund and
the Highlands and Islands Enterprise investment fund (£18.8 million funding for 2014-2016). They
have contributed to success in deploying locally and community owned renewable energy.
• In Wales, large infrastructure planning is a reserved matter, so decisions over projects greater than
50 MW are decided by the UK Planning Inspectorate. The Silk commission on devolution in Wales
recommended that powers over large-scale energy consents (between 50 MW and 350 MW in size)
become devolved to the Welsh Government by 2020. Small-scale developments can be decided
upon locally, with funding provided through the GB Feed in Tariff (FiT).
– Wales does not have targets for renewable capacity but has an aspiration for 22.5 GW by 2025.
In order to achieve this aspiration, a further 20.7 GW capacity will need to be installed through a
variety of technologies. The number of projects in the pipeline currently is not sufficient and the
ambition is unlikely to be achieved.
– The Technical Advice Note (TAN) 89 target to produce 7,000 GWh from renewables by 2020 is
likely to be met. A further 1.9 GW of capacity will be required by 2020. As of March 2015, there are
1.4 GW of projects in the pipeline, either consented or under construction, and a further 1.1 GW
submitted for planning consideration.
– The Government is currently considering a CfD for a tidal lagoon in Swansea Bay, with 320 MW
installed capacity (Box 7.1). Plans for further lagoons (e.g. Colwyn Bay in North Wales) have the
potential to deliver low-carbon power for the UK. We will examine the role of tidal lagoons in
more detail in our 5th Carbon Budget advice which will be published by December 2015.
• In Northern Ireland, the success of renewable electricity development has, according to
Department of Enterprise, Trade and Investment (DETI),10 been due to the support provided by the
Northern Ireland Renewables Obligation (NIRO) which operates in tandem with funding from GBwide schemes. It is estimated that to meet the 40% 2020 target, installed capacity will need to be
between 1.5 and 1.8 GW, an increase of at least 0.7 GW from 2014 capacity. In 2014:
– Solar PV capacity in Northern Ireland has increased 120% and is expected to rise further as the
cost of installation continues to reduce;
– Currently, onshore wind dominates renewable energy capacity, and there are no offshore wind
farms. In 2014, 92% of renewable electricity generated was from onshore wind. A number of
onshore planning applications are currently in the pipeline.
9
10
196
Technical Advice Notes are advice to developers and decision-makers. TAN 8 in Wales is one which provides guidance on land use planning with relation to renewable energy
and sets a target for renewable generation.
DETI (2010) Energy A Strategic Framework for Northern Ireland http://www.detini.gov.uk/strategic_energy_framework__sef_2010_-3.pdf
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
– In order to achieve a 40% target, at least 600 MW of offshore energy will be needed.11 In 2014,
it was announced that the developers of the First Flight Wind project off the east coast of
Northern Ireland were abandoning plans for a 600 MW wind farm due to an unfavourable
regulatory process and insufficient development incentives.
Box 7.1. Swansea Tidal Lagoon
Tidal power could be an energy opportunity for the UK. The proposed 320 MW six-mile horseshoe-shaped sea wall
scheme in Swansea Bay could generate around 500 GWh of electricity per year, enough to power almost 120,000
homes. It would capture incoming and outgoing tides behind the sea wall and use the weight of the water to power
turbines. The scheme could also lead to construction jobs and a new assembly plant in south Wales for underwater turbines.
The cost of generation from the Swansea project will be high (the company are asking for £168 per MWh generated),
but the developers have plans for five subsequent lagoons which they believe will produce electricity more cheaply
(£90-£95 per MWh). Three of the other proposed lagoons sites are in Wales: Cardiff, Newport and Colwyn Bay. The
other two are in Bridgwater in Somerset and West Cumbria.
The project was granted planning permission in June 2015. Negotiations are currently taking place with DECC to
establish whether a Contract for Difference for Swansea Bay Tidal Lagoon project is affordable and value for money.
The RO and NIRO are being replaced by CfDs for large-scale renewable power generation. The CfD
is a competitive scheme and it cannot be known in advance what proportion of contracts will be
allocated to each nation. Under CfD’s, least cost projects are contracted but if those are not in the
devolved administrations then it is harder to provide targeted funding for specific projects. For example
Outer Moray Firth failed to secure a contract in the first CfD auctions in February 2015, but can bid into
subsequent auctions. Northern Ireland is currently not part of the GB small-scale Feed-In-Tariff and
following planned closure of the NIRO, DETI is in discussions with DECC on how they can be integrated
into the FIT. A review will be finalised by the end of 2015.
Scotland is leading the devolved administrations in terms of deployment of renewable power capacity
and meeting their ambitious targets. Northern Ireland is making progress in solar PV and Wales is at
the forefront of tidal lagoons. However, more could be done in Northern Ireland and Wales to ensure
their own targets are met and contributions are made towards wider EU and UK targets. The devolved
administrations should continue to learn from each other and make use of the powers and capacities
available for promoting and demonstrating renewable energy, signifying commitment to investments
and undertaking a mediating role between stakeholders.
3. Buildings
(a) Emissions from residential buildings
Direct residential emissions remained the same in Scotland in 2013 compared to 2012, but rose in
Wales and Northern Ireland (Figure 7.6). This was similar to the overall UK trend (0.4% increase in
2013) and reflects an increase in the demand for heating during 2013 due to colder than average
temperatures early in the year.
• In Scotland, emissions from residential buildings remained the same as in 2012. Emissions were 14%
of all emissions and 13% lower than 1990 levels. Between 2009 and 2013 emissions decreased on
average 0.3% per year.
11
DETI (2011) Draft Onshore Renewable Electricity Action Plan 2011-2020 http://www.nigridenergysea.co.uk/wp-content/uploads/2011/10/Draft-OREAP-Oct-2011.pdf
Chapter 7: Devolved administrations 197
1
• In Wales, emissions from residential buildings rose 0.2% but decreased 0.7% per year on average
between 2009 and 2013. Emissions were 9% of total Welsh emissions and 16% lower than 1990 levels.
• Emissions from residential buildings in Northern Ireland rose 3% in 2013, but decreased 0.5% per
year on average between 2009 and 2013. The sector accounted for 13% of total emissions in 2013,
and emissions were 25% lower than in 1990.
Figure 7.6. Residential emissions in Scotland, Wales and Northern Ireland (1990-2013)
9.0
8.0
Scotland
Wales
Northern Ireland
7.0
MtCO2e
6.0
5.0
4.0
3.0
2.0
1.0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0.0
Source: NAEI (2015).
Note: No inventory data are available for devolved adminstrations for 1991-1994 or 1996-1997
(b) Low-carbon heat
Scotland and Northern Ireland each have targets for renewable heat (Table 7.4); Wales currently has no
heat strategy or heat targets.
Table 7.4. Low-carbon heat targets and progress
DA
Target
Progress in 2013
On track
Scotland
Source 11% of heat demand
from renewable sources
by 2020, and a largely
decarbonised heat sector by
2050. Interim target of 3.5%
in 2012.
In 2013, 0.66 GW operational with an
output of 2.9 TWh. The latest estimate of
heat demand is for 2012 when renewable
heat generation equated to 3% of Scotland
non-electrical heat demand.
No
Wales
-
-
-
Northern Ireland
4% of total heat
consumption to be
provided by renewable
sources by 2015 and 10% by
2020.
In October 2014, 0.3 TWh of renewable
heat was operational. Latest data on
consumption is for 2010 when renewable
heat generation equated to 1.7% of
demand.
No
Source: Energy Saving Trust (2014), DECC (2014), DETI (2014)
In Scotland, the 2020 target does not look likely to be met. The current pipeline of projects is not
sufficient to produce 11% of non-electrical heat demand from renewables in 2020. There is also
uncertainty over the 65 MW Markinch Biomass CHP Plant in Fife, currently the largest biomass plant in
the UK, as the paper mill supplied with heat from the scheme fell into administration in April 2015.
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
In Wales, data from a baseline study of renewable energy12 showed that in 2012, there was almost
60MW of renewable heat capacity in Wales, with a potential to generate 166 GWh of heat per year. This
equates to 0.3% of heat demand in Wales.
In Northern Ireland, targets are also off-track. Local biomass supply is very limited. Biogas from
Northern Ireland’s extensive farming industry, however, could be developed further.
The main renewable heat scheme in the UK is the Renewable Heat Incentive (RHI). It is GB-wide, and
provides payments to those who generate and use renewable energy to heat their buildings. Both
Scotland and Wales have performed well compared to the GB-average in terms of installations under
the RHI:
• The non-domestic scheme has run since November 2011 and focuses on the industrial and
commercial sectors. By March 2015, the scheme had supported around 2,100 MW of installed
capacity, of which 21% was in Scotland and 9% in Wales. These are greater proportions than would
be expected based on a GVA share (8% and 3% respectively).
• The domestic scheme was launched in April 2014. By March 2015, the scheme had supported over
30,600 accreditations, of which 19% were in Scotland and 7% in Wales. These are higher proportions
than would be expected from shares of the GB housing stock (9% and 5%, respectively) but does
reflect Scotland and Wales’ larger share of off-grid homes.
To support the development of low-carbon heat in Northern Ireland, the Executive has introduced its
own RHI and Renewable Heat Premium Payment (RHPP) schemes. These operate in the same way as
they do at a GB level:
• The RHPP scheme was launched in May 2012 for domestic customers as an interim measure for
households in advance of a full domestic RHI scheme. By October 2014, it had provided £2.7 million
of funding and incentivised 1,100 renewable heat installations with an installed capacity of 20MW
• The RHI scheme was launched for non-domestic customers in November 2012. Up to October 2014,
there were 295 applications and 171 accredited installations with an installed capacity of 18MW.
Scotland also has its own policies to encourage the uptake of renewable heat:
• The Scottish Government published a Heat Policy Statement (HPS) in June 2015, setting out its
approach to working towards decarbonising the heat system. It designates energy efficiency as
a National Infrastructure Priority, with Scotland’s Energy Efficiency Programme (SEEP) providing
support to all buildings. The statement also includes a target for district heating, to have 1.5TWh of
heat by 2020 and 40,000 homes connected by 2020. Funding includes:
– The District Heating Loan Fund which provides loans of up to £400,000 per project for lowcarbon and renewable technologies. There is a further £8 million of funding for the scheme
between 2014 and 2016;
– The Home Energy Scotland Renewables Loan scheme which provides interest free loans up
to £10,000 for renewable heat installations for owner occupiers. In 2013-2014 660 loans were
awarded, totalling £4 million.
– The Low Carbon Infrastructure Transition Programme (LCITP), launched in March 2015, with £76
million over the first three years, to provide tailored development support for established and
start-up infrastructure projects, including heat, across private, public and community sectors.
12
Welsh Government (2014) Low Carbon Energy Generation in Wales http://gov.wales/docs/desh/publications/140605low-carbon-baseline-survey-en.pdf
Chapter 7: Devolved administrations 199
1
We will examine the implementation of the Heat Statement commitments in our 2016 Scottish
Progress Report and assess to what extend they meet the recommendations we made in our March
2016 Scottish Progress Report.
We recommended that Scotland should consider further action to facilitate heat networks, for example
through the equivalent of the Heat Networks Delivery Unit, requiring consideration of district heating
in new developments; and obliging local authorities to connect to existing heat networks where
technically possible to provide anchor loads. The same recommendations apply to Northern Ireland.
For Wales, we recommend that the Welsh Government develop a heat strategy and set a renewable
heat target to encourage uptake.
(c) Fuel poverty and progress in energy efficiency policy
Fuel poverty is a partially devolved issue, with each devolved administration having its own targets
(Table 7.5). The devolved administrations continue to use the 10% definition13, rather than the Low
Income High Cost (LIHC) measure used in England.
A number of characteristics make reducing fuel poverty more of a challenge in the devolved
administrations: lower average incomes; higher average energy costs due to housing stock
characteristics with more houses not on the gas grid; and a greater proportion of energy inefficient
properties.
Table 7.5. Proportion of households in fuel poverty in the UK using the ’10% definition’
Targets/milestones
2012
2013
On track
England
Fuel poor should live in homes of EPC rating C or better by 2030
12%
12%
-
Scotland
No one living in fuel poverty by 2016
35%
39%
No
Wales
Eradicate fuel poverty by 2018
30%
n/a
No
Northern Ireland
Eradicate fuel poverty by 2016
42%
n/a
No
Source: DECC (2015)
Energy efficiency policy is well developed and more comprehensive in the devolved administrations
than in England. The main energy efficiency schemes, the Green Deal and Energy Company Obligation
(ECO) are GB-wide (Chapter 2), but Scotland and Wales have devolved powers to develop their own
schemes. Scotland and Wales have been successful in leveraging funding from the ECO, taking a
higher share of the measures than their housing stock (Table 7.6). In Northern Ireland, energy efficiency
is fully devolved and the Executive has developed similar supplier schemes to the GB ones, as well as
their own additional policies.
13 A household is said to be in fuel poverty if it needs to spend more than 10% of its income on fuel to maintain an adequate level of warmth (typically defined as 21 degrees for
the main living area and 18 degrees for other occupied rooms). Under the LIHC definition, a household is considered to be fuel poor if they have required fuel costs that are
above average (the national median level) and were they to spend that amount, they would be left with a residual income below the official poverty line.
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Table 7.6. Provisional numbers of ECO and Green Deal measures and proportion of GB total
DA
Total ECO
measures
delivered
(January 2013
to December
2014)
Green Deal
Cashback
(Wales – up
to March
2014)
Green Deal Home
Improvement
Fund (Wales from
June 2014 until
March 2015)
Green Homes Cashback
Phase 2 (Scotland from June
2014 to February 2015)
Scotland
150,633
measures
(11.6% GB total)
N/A
N/A
3,991 measures installed
66,156
measures (5.1%
GB total)
626
vouchers
(4.3%
England and
Wales total)
(9% of GB housing stock)
Wales
(5% of GB housing stock)
3,305 vouchers paid totalling
£8.3M
2,149 vouchers
(16.6% England and
Wales total)
N/A
Source: DECC (2015), Energy Saving Trust (2015)
Note: Households can have more than one measure installed.
Fuel poverty targets are not being met and fuel poverty remains high in the devolved administrations,
with a rise seen in Scotland in 2013, compared to numbers broadly flat in England.14 The UK
Government and the devolved governments will need to do more. The administrations would benefit
from learning from each other about what works and is cost-effective. Current schemes and funding
available include:
In Scotland:
• The Home Energy Efficiency Programme (HEEPS) has been in operation since April 2013 and
prioritises fuel poor and vulnerable households. Funding in 2015/2016 will be £119 million. The
scheme includes the Affordable Warmth Scheme, Area-based schemes (Box 7.2) and the Energy
Assistance Scheme:
– Alongside funding for physical measures, the Scottish Government also funds Home Energy
Scotland to provide free and impartial advice on appropriate schemes.
– HEEPS has provided continuity and certainty in the face of UK government changes to ECO in
2014. However, funding timescales have been challenging and eligibility for the programme
means households cannot also make use of ECO funding.
• In April 2015, the Scottish Government announced more funding to tackle the rise in fuel poverty.
A £224 million scheme will open in September 2015 and will target the funds at installing
insulation, heating and low-carbon or renewable measures in up to 238,000 fuel poor households.
The contract has been awarded across six different regions to spread delivery costs and ensure
it reaches those rural households otherwise hard to reach. There are also plans to devolve the
implementation of the ECO in the future.
• The Scottish Government has also provided additional funding (£15 million) to encourage the
uptake of its Green Homes Cashback scheme, although the scheme has now closed for new
applications.
The Scottish Government should carry out an evaluation of current energy efficiency programmes
(especially the area-based schemes) to help determine the best way to implement supplier obligations
as they become devolved.
14
Technical Annex 7 – Devolved administrations, Figure 7.1.
Chapter 7: Devolved administrations 201
1
In Wales:
• The Welsh Government has matched ECO funding with an extra £35 million which local authorities
can apply for based on the deprivation index and type of household. Promoting ECO through local
authorities appears to have gained the trust of communities. However, due to initial delays with
funding from the Welsh Government and changes in ECO, the amount of energy efficiency funding
in Wales is now expected to be less than half than previously expected for 2015/2016.
• There are two other main schemes in Wales:
– Nest, run by British Gas on behalf of the Welsh Government, has £20 million per year of funding
and provides eligible households with energy efficiency improvements, whole house retrofits
and call centre advice. It targets those with an energy efficiency rating of F or G, and since 2011
has improved over 15,000 homes.
– Arbed is an area based scheme (Box 7.2) focused on deprived areas of Wales. The second phase
ran from 2012 to June 2015 with £45 million funding from the EU and Welsh Government.
• Current investment is insufficient given the scale of the problem. Estimates in the 2014 Bevan
report15 on fuel poverty suggest that it would take 78 years for the Welsh Government’s Nest
programme to reach each and every home affected by fuel poverty in Wales. Costs to go further
would be substantial. A report by Energy Saving Trust for WWF Cymru16 proposed bringing the
worst performing houses up to energy rating D. This would reduce the number of fuel poor homes
by 40%, with an estimated cost of £2.1 billion. The Well-being of Future Generations Act (legislated
April 2015), with clear mechanisms for reducing carbon emissions and tackling fuel poverty in Wales,
should encourage government agencies to work together to deliver more effective fuel poverty
schemes. We will examine its impacts in future Progress Reports.
In Northern Ireland:
• The Sustainable Energy Programme is a supplier obligation scheme similar to the ECO. It is intended
to run until March 2016 to bridge the gap while Northern Ireland Energy Bill provisions on energy
efficiency are being considered. Up to 2013, the scheme delivered 132,000 measures to priority
domestic households and 3,900 to non-priority domestic.17 The majority (80%) of funding is
targeted at vulnerable households. The other 20% of funding is available for schemes that target
non-priority domestic households and the non-domestic sector.
• The Warm Homes Scheme has a target to install energy efficiency improvements in 9,000 homes
per year. However the Northern Ireland Executive is moving away from this self-referral approach, as
the majority of people in need of help do not self-refer. Affordable Warmth, an area-based scheme,
is being implemented in 2015 after a successful pilot.
Wales and Northern Ireland would benefit from up-to-date house condition surveys in order to
monitor effectively the uptake of energy efficiency measures.
15
16
17
202
Beven Foundation (2014) Rethinking poverty – implications for actions http://41ydvd1cuyvlonsm03mpf21pub.wpengine.netdna-cdn.com//wp-content/uploads/2014/11/
Rethinking-Poverty-Final.pdf
WWF (2012) Cutting carbon emissions in Welsh homes http://assets.wwf.org.uk/downloads/cutting_carbon_emissions_in_welsh_homes.pdf
Utility Regulator (2014) Northern Ireland Sustainable Energy Programme http://www.uregni.gov.uk/uploads/publications/NISEP_notification_paper_2.pdf
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Box 7.2. Area-based energy efficiency schemes in Scotland and Wales
The UK Government could learn from the implementation and success of area-based schemes in Scotland and Wales:
HEEPS: Area-Based Scheme is a Scottish scheme delivered by local authorities which prioritises delivery in fuel poor
areas. £60 million of funding is available for 2014/2015, with the majority being split between the 32 councils and the
remainder being made available to local authorities to develop larger-scale schemes. In 2013/14, almost, 25,000 energy
efficiency measures were delivered (around 15,000 in the private sector and the remainder in social rented sector
stock, mostly focused on solid wall insulation). The Scottish scheme has been important in developing local skill sets.
Arbed is a £45 million project which set a target to improve energy efficiency in a minimum of 4,800 homes across
Wales by the end of 2015, as well as to reduce greenhouse gas emissions by a minimum of 11.6ktCO2. The scheme is
part-funded by the EU and part by the Welsh Government. Figures for installations are currently unavailable but the
Welsh Government considers the scheme to be very successful. The scheme is aimed at whole house retrofits and
also encourages homeowners, landlords and local authorities to apply for other measures not covered by Arbed. Once
measures have been fitted, follow up ‘packs’ are sent to households to encourage behaviour change. An evaluation
on a sample of households is expected to be published later in 2015, along with a Cardiff University study on the
health benefits and NHS savings. The next Arbed scheme will up-scale what has previously been achieved, with more
innovative ideas for materials and processes.
(d) Emissions from non-residential buildings
Emissions from non-residential buildings rose in Scotland and Wales in 2013 consistent with a rise in
emissions at a UK level. However, emissions fell in Northern Ireland (Figure 7.7).
• In Scotland, emissions from non-residential buildings increased by 3%, with emissions from
commercial buildings increasing by almost 5% and those from the public sector increasing slightly
(0.3%). Emissions rose 1% per year on average between 2009 and 2013. The non-residential buildings
sector accounted for 8% of total Scottish emissions in 2013.
• In Wales, emissions from non-residential buildings also rose by 5%, although it is a very small sector,
accounting for 2% of total emissions in 2013. Between 2009 and 2013, emissions rose on average
nearly 2% per year. Emissions from commercial buildings rose nearly 8% and those from public
sector increased nearly 2%.
• In Northern Ireland, emissions from non-residential buildings decreased by 5%, with an average
annual decrease of 4% between 2009 and 2013. Emissions from the commercial sector decreased
nearly 25%, whilst those from the public sector increased nearly 14%. The non-residential buildings
sector accounted for just 2% of emissions in Northern Ireland in 2013.
Chapter 7: Devolved administrations 203
1
Figure 7.7. Emissions from non-residential buildings in Scotland, Wales and Northern Ireland (1990-2013)
3.5
Scotland – commercial
3.0
Scotland – public sector
Wales – commercial
MtCO2e
2.5
Wales – public sector
2.0
Northern Ireland –
commercial
Northern Ireland –
public sector
1.5
1.0
0.5
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0.0
Source: NAEI (2015).
Note: No inventory data are available for devolved adminstrations for 1991-1994 or 1996-1997
While England, Scotland and Wales do not have any separate energy efficiency programmes
specifically targeted towards non-residential buildings, the Sustainable Energy Programme in Northern
Ireland also covers commercial buildings.
It is important for public sector organisations to help to deliver emission reductions and support the
development of skills and suppliers. The Scottish Government has proposed that from November 2015,
Scottish public bodies should be required to report yearly on emissions, savings from carbon projects,
as well as renewable energy generation and consumption. This duty could be useful as monitoring
and reporting of emissions is an essential first step in understanding energy use (Chapter 2).
4. Industry
Emissions from industry rose across the devolved administrations from 2012 to 2013 (Figure 7.8). As at
the UK level, where direct emissions rose 1% despite production continuing to fall. This was due to a
shift towards more carbon-intensive outputs in iron and steel.
• In Scotland, emissions from industry rose only slightly (0.1%) in 2013, with an average annual
decrease of 1.6% between 2009 and 2013. Emissions from the sector accounted for 21% of total
Scottish emissions and have decreased 44% since 1990.
• In Wales, emissions from industry rose nearly 28% in 2013 to 17 MtCO2e, similar to levels in 2008.
Between 2009 and 2013 emissions rose on average 3.5% per year. However, emissions are still 25%
lower than 1990 levels. In 2013, industry emissions were 34% of total Welsh emissions.
• Emissions from industry in Northern Ireland accounted for 11% of total emissions in 2013 and rose
by 3%. Emissions between 2009 and 2013 rose on average by 1% per year; however they are 31%
less than in 1990.
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Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Figure 7.8. Industry emissions in Scotland, Wales and Northern Ireland (1990-2013)
30.0
Scotland
25.0
Wales
Northern Ireland
MtCO2e
20.0
15.0
10.0
5.0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0.0
Source: NAEI (2015).
Note: No inventory data are available for devolved adminstrations for 1991-1994 or 1996-1997
Industry makes up a particularly large portion of total emissions in Wales, with 46% of the emissions in
2013 from Port Talbot steelworks. Emissions from Port Talbot increased significantly in 2013.
1
• Port Neath Talbot local authority in Wales where Tata steelworks is located was the UK’s thirdhighest local authority CO2 emitter in 201218 and its emissions in 2013 accounted for 15% of total
Welsh CO2 emissions (compared to 4.6% of Wales’ population living there).
• In 2013, EU ETS verified emissions for Port Talbot steelworks were 54% greater than in 2012. This
followed two years of decreasing emissions.
• The steelworks is one of the largest in the UK. One of its blast furnaces was reopened in 2013 which
is likely to have increased production and contributed to greater emissions.
Tata Steel has made a commitment to become more energy efficient in Wales. Energy efficiency and
carbon reduction schemes include:
• In April 2010, Tata Steel commissioned a £60 million energy efficiency scheme involving the capture
and re-use of gas from the Basic Oxygen Steelmaking plant. This will be followed up by a £50
million scheme to re-use waste heat. Tata is also involved in the development of HIsarna smelting
technology, with a demonstration plant planned in the Netherlands, which could reduce energy
and emissions by a further 20% from the steel making process.
• Tata has been investigating the use of CO2 utilisation through algae and is continuing to develop
products and solutions that will help its customers reduce their carbon footprint.
While these actions will reduce emissions from the steelworks, Port Talbot is not located near any
planned CCS infrastructure and will not be able to take advantage of this abatement potential as other
UK large steelworks could.
The devolved administrations have little control over industrial policies for emission reductions as these
are largely reserved and operate at the UK/EU level (Chapter 3). Policies include the EU ETS, CRC Energy
Efficiency Scheme, Climate Change Levy and Climate Change Agreements (CCAs), and the Renewable
Heat Incentive (RHI). The Green Investment Bank also operates across the UK.
18
The latest data available for local authorities CO2 emissions is 2012. 2013 data will be released later in 2015.
Chapter 7: Devolved administrations 205
The devolved administrations all offer interest-free loans for small and medium-sized enterprises (SMEs)
for energy efficiency or resource efficiency projects:
• The Resource Efficient Scotland advice service provides support to businesses; third sector and
public sector organisations to reduce costs by implementing resource efficiencies in energy, raw
materials, water and waste management. It offers loans for resource efficient projects and for
renewable energy projects.
• The Carbon Trust offers government funded interest free loans to SMEs for carbon savings and
energy efficiency projects in Wales and Northern Ireland.
Other noteworthy initiatives include a partnership approach in Northern Ireland. In March 2015, a
voluntary Prosperity Agreement was signed between Northern Ireland Environment Agency and
Lafarge Tarmac (Northern Ireland’s only cement plant), which will allow the innovative use of wastederived fuels to secure jobs, prosperity and better environment outcomes in Cookstown. Cement
manufacturing is one of the most carbon-intensive manufacturing processes and Lafarge Tarmac’s
commitment to reduce emissions by 10% over 4 years, as well as increasing the use of alternative fuels,
is an important step forward. The agreement is a good example of joint working between regulators
and industry.
Given the importance of energy-intensive industry for emission reduction, it will be particularly
important for the Welsh Government to develop plans for future, larger abatement requirements in
areas under their devolved powers.
5. Transport
Within the transport sector road transport is mostly reserved in all the devolved administrations,
though demand-side provisions such as road maintenance, cycling, bus policies and bus provisions
are devolved. As part of the devolution settlement, Scotland is likely to get additional powers to set
speed limits.
(a) Emissions trends and drivers
Emissions from transport fell across the devolved administration from 2012 to 2013 (Figure 7.9).
• In Scotland, transport emissions fell nearly 1%, although they were broadly unchanged from 1990
levels. Transport emissions account for 21% of total emissions in Scotland in 2013, in line with the UK.
• In Wales, the transport sector accounts for a smaller share (11%) of overall emissions. Emissions from
transport also fell nearly 1% in 2013 and are 6% lower than in 1990.
• In Northern Ireland, transport emissions fell 1% in 2013 but were 22% higher than in 1990.
Emissions from the sector took an 18% share of overall Northern Irish emissions in 2013. The increase
in emissions since 1990 largely reflects an increase in car ownership rates in Northern Ireland, which
are now comparable with the UK average. Northern Ireland has the highest share of emissions from
rural driving at 63%, compared with 55% in Wales, 50% in Scotland and 40% across the UK as a
whole in 2013.
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Figure 7.9. Transport emissions in Scotland, Wales and Northern Ireland (1990-2013)
14.0
Scotland
Wales
12.0
Northern Ireland
MtCO2e
10.0
8.0
6.0
4.0
2.0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0.0
Source: NAEI (2015).
Note: No inventory data are available for devolved adminstrations for 1991-1994 or 1996-1997
The reduction in emissions from the transport sector is primarily due to an increase in new
car efficiency in 2013 and 2014, despite increases in annual vehicle kms across the devolved
administrations (Table 7.7). The efficiency of new cars is driven by EU legislation; however, there has
been some variation in progress towards achieving the EU’s 2020 target of 95 gCO2/km in 2020
(Figure 7.10).
1
Table 7.7. Change in vehicle kms in 2013 and new car efficiency 2014
DA
Road
traffic
Heavy
Good
Vehicles
Car
Vehicles
New car efficiency 2014
Target for 95 gCO2/km by
2020 on track
Scotland
0.7%
increase
0.9%
increase
0.1%
increase
124.4 gCO2/km (3%
decrease from 2013)
Yes – although behind
Wales and Northern Ireland.
Scotland is in line with UK
average
Wales
1.0%
increase
0.9%
increase
0.5%
increase
123.5 gCO2/km (2%
decrease from 2013)
Yes
Northern Ireland
2.0%
increase
No change
3%
increase
122.7 gCO2/km (3%
decrease from 2013)
Yes – best efficiency in UK
Source: Scottish Government (2015), Department for transport (2015), DRDNI (2014), The Society of Motoring Manufacturing and Traders Limited (2015)
Chapter 7: Devolved administrations 207
Figure 7.10. New car efficiency in Scotland, Wales, Northern Ireland and the UK (2011-2014)
140
Scotland
Wales
Northern Ireland
UK
135
gCO2/km
130
125
120
115
110
2011
2012
2013
2014
Source: The Society of Motor Manufacturers and Traders (2015).
(b) Progress developing electric vehicles markets
There has been an increase in electric vehicle (EV) sales at the UK level since 2010, although this is from
a low base and has been largely driven by sales in England which represented 87% of the total UK
market in 2014. Sales of electric vehicles in Scotland accounted for 7.5% of UK sales in 2014, with Wales
taking nearly 3% and Northern Ireland 2%. These shares were lower than the proportion of overall
vehicle sales for Scotland and Wales (9% and 4% respectively), but the share of electric vehicles sales in
Northern Ireland was in line with its share of overall vehicles sales.
Scotland and Northern Ireland have continued to make progress developing infrastructure and
markets for electric vehicles following on from Plugged in Places funding from Department for
Transport (DfT):
• At the end of January 2015, there were around 850 public charging points across Scotland,
approximately 40 of them being rapid. The Scottish Government has committed £2 million
between 2014 and 2015 to support work across low-carbon vehicles, while Transport Scotland
have been awarded £600,000 funding for 2014/15. Research19 has shown that out of five councils
in the UK with the highest number of EVs in their fleet, four are in Scotland. Dundee Council had
the highest number of EVs (38) following an active programme of replacing diesel pool cars. The
Dundee area also has over 30 charging points.
• In Wales, there has been less of a push for the EV market, partly as it was not a pilot area for
Plugged in Places scheme. There are however over 100 charging points across Wales.
• The ecar project in Northern Ireland has installed electric vehicle charging infrastructure and
offers grants to electric vehicle owners to install charging points in their homes or workplaces. The
scheme also engages in marketing activities. There are 334 charging points available at 174 different
locations. In 2013/2014 the usage of these increased by 790%, and usage in 2014/2015 is expected
to increase further.
Barriers to EVs, both financial and non-financial, remain. These include costs, range anxiety, and lack
of information. We recommend new, low-cost approaches to financing; on-street residential charge
19
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2020 Climate Group News (2015) Scottish councils leading way on electric vehicles adoption http://www.2020climategroup.org.uk/news/scottish-councils-leading-way-electricvehicle-adoption/
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points; softer time-limited measures such as access to bus lanes and parking spaces; and raising
awareness through public procurement.
(c) Changing travel behaviour
The main lever to influence emission reductions from transport in the devolved administrations relates
to infrastructure and service provision, actions to improve transport planning and the support of
behaviour change:
• The Smarter Choices Smarter Places (SCSP) pilot programme in Scotland has been a success in
terms of outcomes. Following an evaluation of the pilot, £5 million of funding has been announced
for 2015/16 for the behavioural change aspects of the programme to be rolled out across Scotland.
This is a one year funded programme; however as behaviour change is recognised as a long-term
process, there is a desire to secure further funding to continue the programme beyond March 2016.
£20 million of funding has been allocated for 2014/15 and 2015/16 to Sustrans Community Links
Programme for exemplar projects that facilitate the use of cycling and walking for commuting.
In addition, a further £7 million of funding has been allocated for 2014/15 for walking and cycling
infrastructure.
• The Active Travel (Wales) Act 2013 makes it a legal requirement for local authorities in Wales to
map and plan for suitable routes for active travel, and to build and improve their infrastructure for
walking and cycling every year. For 2014/15, £5 million of funding has been announced for the Safe
routes in Communities programme with an addition £400,000 for two schools in Bridgend. Wales
also has a Bus Services Support Grant, providing £25 million towards services in 2014/15, and has
established a Bus Advisory Group to inform future decisions. In March 2015, a consultation closed
on a new National Transport Plan which will demonstrate how the Welsh Government will continue
to implement the Wales Transport Strategy. The Welsh Government should demonstrate leadership
and consistency in the promotion of sustainable travel options in the new plan.
• In Northern Ireland, the Executive published an active travel strategy in 2013. This includes a
number of aspirational targets, including increasing the average distance walked, the average
distance cycled and the percentage of trips taken by cycling to be in line with their UK counterparts.
There is also a focus on promoting active travel to school-age children to ensure that by 2015, 36%
of primary school pupils and 22% of secondary school-age children are walking or cycling to school
as their main means of transport. In 2013, 27% of primary and 15% of secondary school children
were walking or cycling to school.
The devolved administrations are often at the forefront of behaviour change programmes and
these policies and action plans can help them to encourage the use of more sustainable methods
of transport. However, to be successful they should ensure infrastructure facilitating sustainable
behaviours such as EV charging and cycling provisions are in place and that any future programmes
and targets are tailored to their specific country’s needs.
6. Agriculture and land use
(a) Agriculture emissions and drivers
Emissions from agriculture in Wales and Northern Ireland fell and those in Scotland rose in 2013 (Figure
7.11). There is considerable uncertainty over emissions from agriculture. Work at a UK level is expected
to reduce that uncertainty over the coming years with the introduction of the Smart inventory. The
level of uncertainty reduces the scope for significant new initiatives at this stage.
Chapter 7: Devolved administrations 209
1
Agriculture in the devolved administrations is relatively more important for emissions and the
economy than the UK as a whole, this is especially the case for Northern Ireland where emissions were
29% of the total compared to 18% in Scotland, 12% in Wales and 9% at a UK level in 2013.
• In Scotland, agricultural emissions rose slightly (0.3%) in 2013 although have reduced 15%
since 1990.
• Emissions from agriculture in Wales fell slightly (0.3%) in 2013 and were 18% below 1990 levels.
• In Northern Ireland, emissions from agriculture fell nearly 1% and are 5% lower than they were
in 1990.
Figure 7.11. Agriculture emissions in Scotland, Wales and Northern Ireland (1990-2013)
12.0
Scotland
Wales
10.0
Northern Ireland
MtCO2e
8.0
6.0
4.0
2.0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0.0
Source: NAEI (2015).
Note: No inventory data are available for devolved adminstrations for 1991-1994 or 1996-1997
Agricultural policy is a devolved matter. As in England, the devolved administrations place considerable
emphasis on a collaborative approach with the farming industry. To date, policy approaches are
voluntary, though the Scottish Government has announced its intention to regulate if significant
progress is not made:
• Scotland has an emissions reduction milestone for agriculture of 1.3 MtCO2e from 2006 levels by
2020 to help towards a 42% reduction by 2020 in all emissions. In 2013 emissions had reduced 0.6
MtCO2e since 2006. However, assessment of progress is difficult due to changes in the methodology
used to measure agricultural emissions since the target was set. The main initiative in Scotland is
Farming for a Better Climate (FFBC):
– FFBC, designed to encourage voluntary uptake of win-win actions in key actions areas: using
energy and fuels efficiency; developing renewable energy; locking carbon into soil and
vegetation; optimising application of fertilisers and manures; optimising livestock management
and storage of waste. In 2013, there were improvements in the greenhouse gas inventory for
agriculture that should include the uptake measures in FFBC.
– The trial, with four farmers, was successful with the farms demonstrating a 10-12% reduction in
carbon emissions. Nine new farms have volunteered to investigate the on-farm benefits from
taking a low-carbon approach through FFBC. However, there is at present no monitoring of how
many farmers have adopted or aim to adopt measures. We recommend that a survey is carried
out to establish whether there has been uptake of FFBC beyond the focus farms and which
measures have worked.
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– In 2014, the Scottish Government announced that the initiative would receive £0.8 million
funding for 2014/2015 and 2015/2016.
• Wales has set a reduction target of between 0.6 MtCO2e (10% below 2008 level) and 1.5 MtCO2e by
2020 in its 2010 Climate Change Strategy. In 2013, emissions were 0.1 MtCO2e higher than in 2008.
However, assessment of progress is difficult due to changes in the methodology used to measure
agricultural emissions since the target was set. Proposed emission reductions are being delivered
through programmes such as A Sustainable Future: The Welsh Red Meat Roadmap, Hybu Cig Cymru
(Meat Promotion Wales), The Dairy Roadmap for Wales and the Glastir programme.
– Glastir offers farmers financial support to develop sustainable land management practices.
The Welsh Government has commissioned a range of modelling and monitoring activities in
order to gauge actual quantification of scheme impacts – the Glastir Monitoring and Evaluation
Programme (GMEP).
– Although actual impacts will not be available to evaluate until late 2016, model simulations of six
measures have been tested for their potential climate change mitigation contribution in the first
annual report of the Glastir programme.20 These initial estimations suggest that the six selected
measures could reduce greenhouse gas emissions on a farm by farm basis up to 24% and are a
positive sign of the potential impact.
• In Northern Ireland, the Greenhouse Gas Implementation Partnership (GHGIP) is a collaborative
strategy between stakeholders and the Executive. GHGIP encourages implementation of onfarm efficiency measures which will reduce the carbon intensity of local food production. The
approach allows the agri-food sector, which is a large contributor to the economy in Northern
Ireland, to address its carbon footprint whilst contributing to economic growth by meeting the
growing global demand for food. A report on Phase I was launched in March 2014 and highlighted
successes, including a £2 million grant to support advance slurry spreading systems to reduce GHS
emissions, the development of a carbon calculator, and 1,400 farmers attending training on nutrient
management. Phase two of the strategy is under development.
(b) Forestry and land use emissions
The size of the carbon sink from the land use, land change and forestry (LULUCF) sector increased
in Wales and Scotland in 2013 (Figure 7.12). In Northern Ireland, the sector was a net emitter in 2013,
although emissions have reduced since 2012.
• In Scotland, the size of the carbon sink increased 3.4% and reached 5.2 MtCO2e in 2013. This is a
significant increase from 1990, when the sector was emitting 0.1 MtCO2e. Between 2009 and 2013,
the average increase of the sink was 5% per year. This reflects increased planting rates and the
changing age profile of the trees and their ability to sequester carbon. The carbon sink in Scotland
represents 99% of the UKs total LULUCF sink.
• In Wales, the sink increased in 2013, rising to 0.6 MtCO2e. The proportion of land converted to
croplands, a source of emissions, has been decreasing since 2000.
• In Northern Ireland, the sector was a net emitter in 201321, emitting 1.5 MtCO2e. This was a reduction
of 0.1 MtCO2e from 2012 due to an increase in forest fires in 2012 increasing emissions in that year. The
largest cause of emissions in the sector is grassland drainage which is unchanged since 1990, land
converted to cropland which has been decreasing since 1995, and land converted to settlements which
is increasing.
20 Centre for Ecology & Hydrology (2014) Glastir Monitoring & Evaluation Programme First Year Annual Report http://gov.wales/docs/drah/publications/140701-gmep-annual-report.
pdf
21 According to the 2013 inventory, the LULUCF sector in Northern Ireland has been a net emitter since 1990. Previous inventories showed the sector as a small sink between 1995
and 2011.
Chapter 7: Devolved administrations 211
1
Figure 7.12. Emissions from land use, land use change and forestry in Scotland, Wales and Northern Ireland
(1990-2013)
2.0
Scotland
1.0
Wales
0.0
Northern Ireland
MtCO2e
-1.0
-2.0
-3.0
-4.0
-5.0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
-6.0
Source: NAEI (2015).
Within the forestry sector, the devolved administrations have ambitious targets to increase the rates of
tree planting (Table 7.8):
Table 7.8. Afforestation targets and progress
DA
Forestry targets/policy
Progress 2014
On track
Scotland
Plant 10,000 hectares per year, creating
100,000 hectares by 2020
8,300 hectares planted, a 20% increase
from 2013 planting rate
No
Wales
Plant 100,000 hectares of new woodland
over a 20 year period, equivalent to 5,000
hectares per year
900 hectares planted
No
Northern Ireland
Double the area of forest from 6% in 2012
to 12% in 2056, equivalent to planting
1,700 hectares per year
300 hectares planted
No
Source: Forestry Commission (2015)
• In Scotland, planting rates have failed to meet the target set, although rates in 2014 were higher
than 2013 (but not as high as 2012 when 9,000 hectares were planted). This has in part been due
to poor weather in recent years, and competing land use. Scotland’s first Land Use Strategy (2011)
is due for review in 2015, with the second strategy due in March 2016. In 2014/2015 and 2015/2016,
the Scottish Government has £61m funding available under the Woodland Creation scheme to
encourage planting on private land.
• The recent planting rate in Wales has increased since 2011 when rates were in the low hundreds
of hectares. This was due to the planting part of Glastir programme gaining traction. However,
more is required to meet targets. The Welsh Government is supporting action through the Nature
Fund which was set up to tackle the continuing decline in biodiversity. The Fund is supporting
a total of 20 projects that will take forward a collaborative, innovative approach to achieve
sustainable land management at a landscape scale. The projects include tree planting and peat bog
restoration. Going forward, the Welsh Government has instigated a review of the Land Use Climate
Report (2010):
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– The original report22 highlighted that the reasons measures to reduce emissions sponsored by
the Welsh Government were not taken forward was in part due to lack of clarity (e.g. where to
place woodland creation) and a lack of sufficient incentives for farmers and land owners (e.g. for
woodland creation and peatland restoration).
– The review will be used as a key document in shaping the climate interventions of the Wales
Rural Development Programme 2014-2020, Glastir and other land-based elements and help
prioritise areas for investment and provides an evidence base to develop further actions to cut
greenhouse gas emissions and adapt to a changing climate. The main areas for delivery are:
improved efficiency of agricultural production; expanding woodland and restoring peatland;
and, exploiting opportunities in rural areas for generating renewable energy.
• In Northern Ireland, the Rural Development Programme 2014-2020 is worth over £500 million
and aims to improve competitiveness in agriculture and forestry, improve the environment and
the quality of life in rural areas and diversification of the rural economy. The woodland investment
scheme and forest expansion scheme have £800,000 available for 2014-2020.
The devolved administrations should consider whether further action is needed to ensure tree
planting targets are met. These could include introducing additional measures to incentivise planting.
Any plan or strategies introduced should be developed and delivered jointly with key stakeholders and
other nations. Future planting should also include a diverse range of species, as discussed in Chapter 5
of our Adaptation Progress Report.
The LULUCF inventory currently only includes emissions from lowland peat. Emissions related to
upland peat and peatland restoration are excluded. However, the IPCC has finalised the methodology
for capturing the changes in emissions, focusing on the rewetting and restoration of peatlands since
1990. Inclusion in the inventory by member states is voluntary:
• Peatlands cover approximately 21% of land area in Scotland. They account for 60% of the UK’s
peatlands and 4% of Europe’s total peat carbon store. 600,000 hectares of peatlands require
restoration in Scotland. By March 2015, 6,500 hectares have been restored, short of the Scottish
Government’s ambition to restore at least 10,000 hectares by 2015. The Scottish Government has
announced £15 million for peatland restoration for 2014/15 and 2015/16. Scotland’s 2014 National
Peatland Plan sets out proposals for research and awareness-raising.
• In Wales, around 25% of the land area is peat. The Resilient Ecosystems Fund23 has provided
£165,000 to restore peatlands in Welsh Water’s two reservoirs.
• Peatlands cover 13% of the land area in Northern Ireland but store 42% of the country’s soil carbon
store. Around 80% of Northern Ireland’s peatlands have been degraded. Financial support has been
given to peatland restoration projects, largely through the Rural Development Programme.
Peatlands in the devolved administrations account for large areas of land. In Chapter 6 of our
Adaptation Progress Report, we have identified that too much burning of peatland is being carried
out by landowners, even if the land is designated as a site of special scientific interest. The devolved
administrations should encourage good practice in heather and grass burning to avoid damage to
peatlands. They should also ensure that detailed management plans are produced for restorations.
22 ADAS (2014) Review of Land use Climate Change http://thecccw.org.uk/wp-content/uploads/2015/02/ADAS-review-of-LUCC-final-report-2014.pdf
23 The scheme was a partnership between Natural Resources Wales, RSPB Cymru, Snowdonia National Park Authority and the National Trust.
Chapter 7: Devolved administrations 213
1
7. Waste
Waste is fully devolved to the Scottish and Welsh Governments and Northern Ireland Executive. In 2013,
emissions from waste declined across all the devolved administrations (Figure 7.13). They fell nearly 16%
in Scotland, 14.5% in Wales, and 13% in Northern Ireland, compared to 14% in England. Waste emissions
account for only a small proportion of total emissions of Scotland, Wales and Northern Ireland (5%, 2%
and 3% respectively).
Recycling rates have been improving in recent years (Figure 7.14), with more than 54% of municipal
waste sent for recycling/composted/reused in Wales in 2013/14, the highest in the UK and fourth
highest in Europe. Scotland and Northern Ireland had recycling rates around the 40% mark and
England 44%.
Figure 7.13. Waste emissions in Scotland, Wales and Northern Ireland (1990-2013)
12.0
Scotland
Wales
10.0
Northern Ireland
MtCO2e
8.0
6.0
4.0
2.0
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0.0
Source: NAEI (2015).
Note: No inventory data are available for devolved adminstrations for 1991-1994 or 1996-1997
Percentage of local authority collected waste
recycled/composted/resused
Figure 7.14. Recycling rates in Scotland, Wales, Northern Ireland and England (2006/07-2013/14)
60%
Wales
50%
England
Scotland
40%
Northern Ireland
30%
20%
10%
0%
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
1012/13
2013/14
Source: Defra, SEPA, Environment Agency Wales, and the Northern Ireland Executive (2015)
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We discuss progress in the implementation of devolved waste policies in detail in Chapter 6. Key
findings are:
• Scotland missed its 2013 interim target of 50% for municipal waste recycled, composted or reused
with 43% recycled in 2013. This is likely to improve in 2014 following new measures introduced
under the Waste (Scotland) Regulations 2013. Scotland’s overall waste sent to landfill increased to
40% in 2012, however, due to the overall tonnage of waste decreasing, the amount send to landfill
actually decreased 3.5% to 4.5 million tonnes. Landfill tax will be devolved to Scotland and be set
10% higher than the UK rate for the first three years. We recommend that Scotland publishes a
detailed plan on how it intends to meet its targets to reduce biodegradable municipal waste going
to landfill, including the cost-effectiveness of planned progressive bans on waste sources.
• Reductions in emissions in Wales are due to a number of regulatory targets for municipal recycling
and waste going to landfill. In 2013, Wales met its 52% waste recycling 2012/2013 target, in 2013/14
this rose to 54.3% – leading the UK. Landfill tax is likely to be become devolved to Wales in 2018.
In Wales, the Government has moved to a circular economy approach with regards to waste.
This is an alternative to a linear economy, encouraging resources are kept for as long as possible,
extracting maximum value from them while in use, and then recovering and regenerating products
and materials at the end of service life. Utilising a circular economy across the UK could provide
opportunities for innovation, new business models and elimination of waste.
• Progress has been made in Northern Ireland with a ban on food waste going to landfill, targets for
waste material recycling and recovery across the economy and a successful first year of the carrier
bag levy. We recommend that Northern Ireland evaluate the impact of the food waste ban, and set
biodegradable waste prevention and landfill targets.
8. Forward look
Emissions fell in Scotland, rose in Wales and remained roughly the same in Northern Ireland in 2013.
Progress against targets remains mixed with future targets being very challenging to achieve.
The devolved administrations each have emission reduction targets that if met would contribute
greatly to the UK’s ability to meet to the next set of carbon budgets. By 2020, if emissions in the
devolved administrations fall in line with their targets, there would be a combined reduction of 39% (~
64 MtCO2e), 11% of UK emissions in 2013. They each have a report on how emission reduction targets
will be met:
• Scotland’s second Report of Policies and Proposals24 (RPP2) sets out how Scotland will be able to
meet its own statutory annual targets to 2027 set out in the Climate Change (Scotland) Act 2009 as
well as the 42% reduction target to 2020. The report estimates that reductions of 43.3% in 2020 and
57.8% in 2027 could be achieved if they implement all policies and proposals in the report and the
EU ambition within the traded sector remains at 20%.
• Wales’ Climate Change Strategy25 outlines the policies and programmes required for meeting the
40% target for reductions from all sectors by 2020 and the 3% annual reduction target (which
includes all direct greenhouse gas emissions in Wales, except those from heavy industry and power
generation). The Welsh Government has also published an Environment Bill due to be legislated in
spring 2016. One of the key parts of the Bill is climate change. The Welsh Government intends to put
in place statutory emission reduction targets and carbon budgeting.
24 Scottish Government (2013) Low carbon Scotland http://www.gov.scot/Resource/0042/00426134.pdf
25 Welsh Government (2010) Climate Change Strategy for Wales http://gov.wales/docs/desh/publications/101006ccstratdeliveryemissionsen.pdf
Chapter 7: Devolved administrations 215
1
• Northern Ireland’s Greenhouse Gas Emissions Reduction Action Plan26 sets out how the Programme
for Government’s 35% reduction target by 2025 target will be met. Northern Ireland’s Executive
has in the past considered a Climate Change Act and has requested advice from the CCC on the
appropriateness of this.27
In emission reduction and a number of policy areas, the devolved administrations have set more
challenging targets than the UK, with funding in addition to that available from UK/GB-wide policies.
This is particularly evident in residential energy efficiency and fuel poverty, waste and agriculture and
land use. However, stronger action will be required in key areas in order to meet future targets – both
those set at the devolved administration level and UK/EU level.
• Scotland has failed to meet its first four annual targets. This has in part been due to the targets
being absolute and therefore being impacted significantly by changes to the inventory. However,
Scotland is still on track to meet its 42% reduction compared to 1990 levels by 2020.
• Wales’ 3% annual targets are being met. However, progress towards meeting its ambitious 40%
reduction target by 2020 has fallen short. Wales has a higher proportion of traded emissions
covered by the EU Emissions Trading Scheme (ETS) than the rest of the UK, meaning the 40% target
is particularly sensitive to increases in EU-ETS emissions for which the framework is non-devolved.
• In Northern Ireland, the latest projections to 2025 suggest that it will not meet its targets.
Both Wales and Northern Ireland emissions are dominated by specific sectors (agriculture in the case
of Northern Ireland, industry in the case of Wales). The Welsh Government will need to consider ways
to reduce industry emissions as targets tighten in the future by, for example, considering voluntary
agreements with large emitters, and looking at encouraging innovative solutions. Following Defra’s
delivery of the Smart inventory, Northern Ireland will need to put in place local monitoring and process
for acting on its findings.
Further action across all the devolved administrations is required, in particular within energy efficiency
programmes, increasing low-carbon heat penetration, encouraging greater uptake of electric vehicles
and travel behaviour changes, increasing tree-planting rates and ensuring waste targets are met.
9. Summary
In order to meet the targets outlined above and to contribute to UK carbon budgets, improved policy
and additional action is needed in the devolved administrations to drive investment, innovation and
low-carbon choices:
• Low-carbon investment: To meet carbon budgets, further investment in the devolved
administrations will be required. For example, ambitious renewable energy targets require
long-term investment and funding streams. Devolved policies can play an important role in
supplementing UK policies to drive investment in renewable heat and electricity. Investment
incentives are also needed in areas which are fully devolved, such as tree planting (e.g. through
sources of public and private funding). The devolved governments will need to extend existing
policy approaches and funding commitments into the 2020s.
26 Cross-Departmental Working Group on Greenhouse Gas Emissions (2011) Northern Ireland Greenhouse Gas Emissions Reduction Action Plan http://www.doeni.gov.uk/northern_
ireland_action_plan_on_greenhouse_gas_emissions_reductions.pdf
27 CCC (2011) The appropriateness of a Northern Ireland Climate Change Act http://archive.theccc.org.uk/aws2/Northern%20Ireland%20-%20Annex%20-%20advice%20on%20CC%20
Act.pdf
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• Developing future options and innovation: Innovate UK and research councils operate at a
UK-wide level; however the devolved administrations have a role to play and Innovate UK works
closely with the governments of, and partners in, Scotland, Wales and Northern Ireland. In Wales,
the Government has moved to a circular economy approach with regards to waste. Utilising a
circular economy across the UK could provide opportunities for innovation, new business models
and elimination of waste. The devolved administrations, especially Scotland, have a number of
successful schemes for promoting and incentivising renewable energy innovation, such as the
Scottish Infrastructure and Innovation Fund. In the future, these should target a balance and mix of
technologies in a range of renewable energies.
• Low-carbon choices: The devolved administrations are often at the forefront of piloting behaviour
change schemes, such as the Smarter Choices Smarter Places in Scotland and the number of
voluntary agriculture programmes. To ensure that consumers are incentivised to choose low-carbon
options, there needs to be a continued evaluation of schemes to assess progress and ensure that
actions are targeted in priority areas.
1
Chapter 7: Devolved administrations 217
Abbreviations
ACUMEN
Assessing, Capturing and Utilising Methane from Expired and Non-operational landfills
AD
Anaerobic Digestion
BEV
Battery Electric Vehicle
BIS Department for Business, Innovation & Skills
BMW Biodegradable Municipal Waste
CCAs Climate Change Agreements
CCC Committee on Climate Change
CCGT Combined-Cycle Gas Turbine
CCL Climate Change Levy
CCS Carbon Capture and Storage
CCT Company Car Tax
CERO
Carbon Emission Reduction Obligation
CfD
Contract for Difference
CH4Methane
CHP
Combined Heat and Power
CO2
Carbon dioxide
CO2e
Carbon dioxide equivalent
CPF
Carbon Price Floor
CPS
Carbon Price Support
CRC
CRC Energy Efficiency scheme (previously Carbon Reduction Commitment)
CSCO
Carbon Savings Community Obligation
DCLG
Department for Communities and Local Government
DEC
Display Energy Certificate
DECC
Department for Energy and Climate Change
Defra
Department for Environment, Food and Rural Affairs
DSBR
Demand-Side Balancing Reserve
DSR
Demand-Side Response
218
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
DfT
Department for Transport
DUKES
Digest of UK Energy Statistics
EC
European Commission
ECA Enhanced Capital Allowance
ECO Energy Company Obligation
EEP See UEP
EMR Electricity Market Reform
ENSG Electricity Network Strategy Group
ENUSIM Energy End-Use Simulation Model
EPC Energy Performance Certificate
EPS Emissions Performance Standard
ESOS Energy Savings Opportunity Scheme
EU European Union
EU ETS European Union Emissions Trading System
EV Electric vehicle (BEV or PHEV)
FEED Front-End Engineering Design
F-gases Fluorinated gases
FIDER Final Investment Decision Enabling Regime
FTA Freight Transport Association
GDA Generic Design Assessment
GDP Gross Domestic Product
GHG Greenhouse Gas
GIB Green Investment Bank
GVA Gross Value Added
GW Gigawatts
GWh Gigawatt hours
GWP Global Warming Potential
HEFCE Higher Education Funding Council for England
HFCs Hydrofluorocarbons
HGV Heavy goods vehicle
HHCRO Home Heating Cost Reduction Obligation
Abbreviations 219
HNDU Heat Networks Delivery Unit
IAS International Aviation and Shipping
ICAO International Civil Aviation Organisation
ICE Internal Combustion Engine
IED Industrial Emissions Directive
ILUC Indirect Land Use Change
IMO International Maritime Organisation
IPCC Intergovernmental Panel on Climate Change
ITPR Integrated Transmission & Planning Regime
kW Kilowatt
kWh Kilowatt-Hours
LA Local Authority
LCF Levy Control Framework
LCPD Large Combustion Plant Directive
LCRS Logistics Carbon Reduction Scheme
LIHC Low Income High Cost
LSTF Local Sustainable Transport Fund
LULUCF Land use, land use change and forestry
MAC Mobile air conditioning
MW Megawatt
MWh Megawatt-Hour
N2O Nitrous oxide
NAEI National Atmospheric Emissions Inventory
NEDC New European Drive Cycle
NER New Entrants Reserve
NOX Oxides of nitrogen
Ofgem Office of the Gas and Electricity Markets
OLEV Office for Low Emissions Vehicles
ONS Office for National Statistics
PFCs Perfluorocarbons
PHEV Plug-In Hybrid Electric Vehicle
220
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
PM Particulate Matter
R&D Research and development
RAC Refrigeration and air-conditioning
RHI Renewable Heat Incentive
RO Renewables Obligation
ROC Renewables Obligations Certificate
RTFO Renewable Transport Fuel Obligation
SAP Standard Assessment Procedure
SF6 Sulphur Hexafluoride
SMEs Small and Medium Enterprises
SMMT Society of Motor Manufacturers and Traders
TW Terawatts
TWh Terawatt hours
UEP DECC’s Updated Energy Projections
UK United Kingdom
ULEV Ultra-low emission vehicle
VECTO Vehicle Energy Calculation Tool
VED Vehicle Excise Duty
WLTP World Light Duty Test Procedure
WPP Waste Prevention Programme
WRAP Waste and Resources Action Programme
ZCH Zero Carbon Homes
Abbreviations 221
www.theccc.org.uk
@theCCCuk
Meeting Carbon Budgets - Progress in reducing the UK’s emissions | Committee on Climate Change | 2015 Report to Parliament
Committee on Climate Change
7 Holbein Place
London
SW1W 8NR
Meeting Carbon Budgets - Progress
in reducing the UK’s emissions
2015 Report to Parliament
Committee on Climate Change
June 2015
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