The government needs to ensure there is a proper debate on the seventh carbon budget

The Climate Change Committee (CCC), the government’s advisory body on climate, has released its latest carbon budget advice on the level of emissions reductions the government should be targeting from 2038 to 2042. 

The Climate Change Act requires the government to then put its proposed target to parliament to be voted into law, and past carbon budgets have just been nodded through by parliament with minimal debate. The breakdown in the net zero consensus means that will change – and that is an opportunity.  

This carbon budget will attract more scrutiny and debate than its predecessors 

The previous prime minister Rishi Sunak argued in 2023 that the lack of debate around net zero plans was unhelpful and that he would like to see better parliamentary discussion of carbon budgets – a view shared (at least on the first point) by his successor Kemi Badenoch and Andrew Bowie, currently standing in as shadow energy security and net zero secretary. With the increasing politicisation of net zero, they may well get their wish this time. That would be good, because too many politicians are willing to give the impression that it is the CCC that sets the budgets, not the government with parliament’s agreement.  

If the government follows the CCC’s advice and produces plans in advance on how it will meet the target, scrutiny will also improve and the debate will be able to move beyond generalities about targets into specifics about what to do and – crucially – who pays and how to ensure that the transition is fair. 

The government needs to make clear whether it is prepared to act to make electricity cheaper  

The first thing to emerge from the CCC advice is that its estimates of the cost of the transition have fallen. That cost is now put at 0.2% of GDP a year on average, and the good news is that by 2040 the CCC calculates that most households will start seeing the returns of investment in more efficient, lower carbon technologies paying off in lower running costs. Its new distributional analysis for 12 typical household types shows those without cars (who can’t benefit from the switch to EVs) and who cannot electrify their heating are the only losers. This is the first time the CCC has produced such an analysis – and something the Treasury shied away from tackling in detail in its 2021 net zero review. 

But that is based on a big assumption, critical to making a success of the transition, that levies are moved off electricity bills to somewhere else – either gas bills or general taxation or a combination of both. Electricity is currently four times more expensive than gas in part because most levies (or policy costs) sit on electricity bills rather than gas bills. While electric vehicles are already cheaper to drive and maintain, and the CCC predicts they will rapidly also reach price parity, without action to reduce policy costs it estimates thats the cost of running a heat pump will only reach parity with a gas boiler in 2035. That is a major blocker to meeting its pathway, which sees half of households having a heat pump by 2040. The willingness of the government to reduce levies on electricity is critical to making the numbers stack up.  

While the advice suggests that most UK businesses will see minimal effects from net zero in the long term it does note that some industrial sectors, like cement, will need support to transition, potentially including carbon border adjustment mechanisms (which put a cost on imports from countries with less stringent emissions standards) to prevent UK industrial activity moving overseas to countries where production might have higher emissions, damaging the global transition to net zero and reducing UK industrial capacity.  

The CCC has started engaging with the public – the government should too 

There are genuine policy debates to be had about how best to support consumers and industry through the transition given fiscal constraints, and what is the most effective path for the UK economy. The CCC is also aware that it is now offering advice against a background when there is a much more heated policy debate about both how and whether to go for net zero – hence it avoids explicit commentary on airport expansion, and on diet and active transport prefers to extrapolate current trends rather than make firm recommendations that people should stop eating meat or cycle rather than drive. Even so, recommendations on the consequences of those trends – such as falling livestock numbers or the implications for fare prices of forcing airlines to bear the costs of decarbonisation – may prove contentious.  

So it was a good move by the CCC to consult a citizens' panel to explore their views on the changes needed. The panel wanted government support for upfront costs for decarbonising things like home heating and driving for commuting, but saw price increases as more acceptable for flying – which was seen as more optional.  

They also wanted more trusted public information and engagement from government on climate change and different household choices to dispel misinformation. This is an area where government action has been notably lacking in recent years, leaving information to the private sector and media. Alongside enabling a proper and open debate about the pathways to net zero, the government should follow the CCC’s lead and start to engage more actively with the public.