1 meeting carbon budgets – 4th progress report to parliament committee on climate change, june...

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Meeting carbon budgets –4th Progress Report to Parliament

Committee on Climate Change, June 2012www.theccc.org.uk

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Contents

1. Context: Fourth budget and previous progress reports

2. Key messages of today’s report

3. Emissions and their drivers in 2011

4. Emissions in the non-traded sector

5. Emissions in the traded sector

6. Sectorsa) Powerb) Buildings c) Industryd) Transporte) Agriculturef) Waste

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Legislated and Intended budgets

Source: CCC (2010) The Fourth Carbon Budget

1,950

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Context:Our fourth report on progress towards carbon budgets

First application of indicator framework:• Large emissions fall due to recession• Indicators roughly as expected• New policies needed to drive the step change

First application of indicator framework:• Large emissions fall due to recession• Indicators roughly as expected• New policies needed to drive the step change

A framework of indicators consistent with budgets:• Emissions trajectories• Indicators for implementation of abatement measures• Forward indicators of investments in the project cycle• Policy milestones

A framework of indicators consistent with budgets:• Emissions trajectories• Indicators for implementation of abatement measures• Forward indicators of investments in the project cycle• Policy milestones

The need for a step change

The need for a step change

Aims: • Report latest data• Assess current progress• Monitor against indicators

Aims: • Report latest data• Assess current progress• Monitor against indicators

First (2009)First

(2009)

20102010

Now (2012)Now

(2012)

First assessment of underlying progress:• Emissions increased due to cold weather• Underlying progress basically flat• Still need for a step-change

First assessment of underlying progress:• Emissions increased due to cold weather• Underlying progress basically flat• Still need for a step-change

20112011

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Today’s report - Key messages

• Underlying trend not enough to meet future carbon budgets – urgently need four-fold increase in pace of underlying emissions reductions


• New policies key: Electricity Market Reform, Green Deal, support for renewable heat• New policies key: Electricity Market Reform, Green Deal, support for renewable heat

• Economy-wide emissions fell 7% – due mainly to mild winter weather, falling real income and rising fuel prices


• Whereas we envisaged a lead time for development of polices to drive emissions reductions, this has now elapsed.


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CO2 emissions fell sharply in the context of mild winter weather, high fuel prices and falling income

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With biggest falls from energy used to heat buildings

Note: ‘Other’ category includes agriculture CO2 and emissions from land use, land use change and forestry (LULUCF)

(% change 2010-2011)

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Non-traded sector emissions are below the current budget level, even after adjusting for weather effects

* As proposed in our 2008 report, the Intended budget (2008-2022) corresponds to the UK share of an EU 30% 2020 target. We recommended it should be enacted in the context of a global deal to reduce emissions.

Non-traded sector emissions v. future budgets

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Progress implementing measures in the non-traded sector reduced emissions by only around 0.8%

Rising prices, falling incomes etc

Efficient boilers, loft and cavity wall insulation,

renewable heat, new car CO2

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Continuing progress at the 2011 rate would not be enough to meet future budgets

Non-traded sector emissions v. future budgets

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But successfully implementing policy measures would lead to an outperformance of second and third legislated budgets, and prepare for the fourth budget

Government non-traded sector emissions projections v. future budgets

*As proposed in our 2008 report, the Intended budget (2008-2022) corresponds to the UK share of an EU 30% 2020 target. We recommended it should be enacted in the context of a global deal to reduce emissions. Trajectory has been smoothed.

Continued outperformance is

required to meet 4th budget therefore

outperformance should not be banked

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Traded sector emissions fell, leaving them well below the UK cap

* As proposed in our 2008 report, the Intended budget (2008-2022) corresponds to the UK share of an EU 30% 2020 target. We recommended it should be enacted in the context of a global deal to reduce emissions.

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EU traded sector emissions fell, leaving even more headroom under the current cap. Carbon price remains low.

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Measures that increase EU ambition to 2020 and drive up the EU ETS price will put the EU on a more cost-effective path to achieving its 2050 target

Also constructive in international context, where progress has been made but significant risks remain•Durban Platform – timetable for global deal•Domestic climate actions – China, Australia, South Korea, Mexico, California, Quebec•IEA – significant risk of missing climate objective

UK should strongly support measures that increase EU ambition and ETS price• Tightening of the existing EU ETS cap to 2020• Underpinning the EU ETS carbon price• Agreeing ambitious EU emissions reduction targets for 2030

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7% fall in power emissions driven mainly by short-term factors

Decrease in emissions intensity by 2% due to increased

renewable generation and fewer nuclear outages

4% decrease in energy demand (2% decrease after adjusting for temperature)

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Additions of wind capacity broadly on track, but acceleration required in mid-2010s

Healthy project pipeline • enough to cover build to 2020 for onshore, 2017 for

offshore BUT

Current bottleneck • planning approval rates down 50% (onshore)• determination periods still long• projects moving slowly from approval to construction

Healthy project pipeline • enough to cover build to 2020 for onshore, 2017 for

offshore BUT

Current bottleneck • planning approval rates down 50% (onshore)• determination periods still long• projects moving slowly from approval to construction

Need to address•uncertainties over support mechanisms (RO, EMR)•other barriers (decision framework for onshore, finance, radar interference, T&D)

Need to address•uncertainties over support mechanisms (RO, EMR)•other barriers (decision framework for onshore, finance, radar interference, T&D)

Forward IndicatorsForward Indicators

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Progress on CCS and nuclear

Approval of National Policy Statement

Submission of planning application for first new plant

Horizon venture stalled (5 GW), credible buyer needed

EMR is key

First competition failed to award funding

New process launched, to select 4 projects by end of 2012

Demonstration required urgently

Ideally include a gas CCS project

Provide clarity on support beyond initial projects

Set out strategic approach to CO2 infrastructure

CCS Nuclear

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Progress on Electricity Market Reform but clear carbon objective needed

Requires a carbon objective:• Reduce carbon intensity to the order of 50g/kWh by 2030• Achieve with a portfolio of technologies

• include minimum deployment levels for less mature technologies

• Flexibility over precise path of decarbonisation• to be determined as uncertainties are resolved (e.g. costs,

build rates, demand)

Plus detailed design issues need to be resolved

Support provided via long-term contractsNew modelling reinforces power sector decarbonisation as appropriate approach across wide range of scenarios

Lack of carbon objective undermines investor confidence and riskssecond ‘dash for gas’

E.g. reference price for intermittent renewables

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Buildings emissions fell by 12% due to the mild winter weather and decreased carbon intensity of electricity

Energy consumption

Emissions intensity

Emissions

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Need to accelerate implementation of insulation and renewable heat measures

Loft insulation

Cavity wall insulation

Solid wall insulation

Renewable Heat (TOTAL)

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Success will require strong policy measures

Green Deal:•Strengthen incentives for loft and cavity wall insulation prior to launch in autumn 2012•Projected uptake higher than (very low levels) in original proposals but still below numbers needed to meet carbon budgets

Green Deal:•Strengthen incentives for loft and cavity wall insulation prior to launch in autumn 2012•Projected uptake higher than (very low levels) in original proposals but still below numbers needed to meet carbon budgets

Renewable Heat: •Include residential sector in Renewable Heat Incentive (RHI) from summer 2013•Introduce approaches to address non-financial barriers•Resolve uncertainty about RHI beyond 2015

Renewable Heat: •Include residential sector in Renewable Heat Incentive (RHI) from summer 2013•Introduce approaches to address non-financial barriers•Resolve uncertainty about RHI beyond 2015

Carbon Reduction Commitment:•Retain but with reduced administrative burden and redesigned league table•Consider scope for rationalisation of policies

Carbon Reduction Commitment:•Retain but with reduced administrative burden and redesigned league table•Consider scope for rationalisation of policies

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Industry CO2 emissions

Manufacturing output

Industry emissions fell 5% despite an increase in manufacturing output

Need to develop evidence to understand underlying progress

Some evidence of improvement in energy

efficiency, though uncertain

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Surface transport emissions were flat in 2010. Within this, car emissions fell by around 3%. However there are questions over modal estimates.

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Indicators for 2011 suggest car emissions may have decreased

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Progress laying foundations for electric vehicle market but limited progress on travel behaviour

Electric vehiclesElectric vehicles

• Plug-in car grant launched, now extended to vans

• Around 6,000 publicly and privately provided charge points delivered to the end of March 2012

• Uptake still behind trajectory but early days - expect increased uptake in 2012 with more electric models coming to market

• Plug-in car grant launched, now extended to vans

• Around 6,000 publicly and privately provided charge points delivered to the end of March 2012

• Uptake still behind trajectory but early days - expect increased uptake in 2012 with more electric models coming to market

Indicator Outturn

5,000 1,100

Behavioural measures

Behavioural measures

Eco-driving Very low levels of eco-driving training in 2011

Smarter Choices £560 million Local Sustainable Transport Fund-sufficient to roll out Smarter Choices to 25% of UK by 2015

Speed limiting Consultation on increasing motorway speed limit announced-would significantly increase emissions vs. enforcing current limit

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Agriculture emissions increased slightly in 2010 due to increase in crop-related N2O intensity

Priorities remain improvements in the

evidence base and consideration of policy

options to drive abatement measures

Increase in fertiliser use despite decline in crop production

Livestock production increased but emissions intensity improved

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Waste emissions (mostly methane from landfill) fell 3% in 2010 continuing a longer trend where emissions have declined 64% since 1990

• Landfill tax (to meet EU Landfill Directive targets) key driver for diverting waste away from landfill

• Emissions projected to continue to fall in line with targets

• Greater reductions are possible (and may be desirable given legacy emissions)

• These should be explored through additional levers (e.g. food and paper/card diversion strategies)

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Today’s report - Key messages



• New policies key: Electricity Market Reform, Green Deal, support for renewable heat• New policies key: Electricity Market Reform, Green Deal, support for renewable heat





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