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Climate Change Plan

March 2010

March 2010

Climate Change Plan

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ISBN-13-978-184532-710-1 PU943

Contents

Foreword i

Introduction 1

TheTreasury’sroleindeliveringcarbonbudgets 5

DeliveringtheTreasury’scarbonbudget 15

Adaptingtoclimatechange 19

AdaptationandtheTreasury 25

HMTreasuryClimateChangePlan|i

Foreword

TheUKcontinuestoleadthewayaspartoftheglobalefforttoavoiddangerousclimatechange,withtheaimofachievingalegallybindingagreementassoonaspossible.Partofthisleadershiproleinvolvesdemonstratingtotherestoftheworldthatlow-carbongrowthisnotonlypossible,butprofitable.

Theworld’sfirstcarbonbudgets,announcedattheBudgetin2009,wereamajorstepalongthispath.BasedontheplanssetoutinTheUKLowCarbonTransitionPlan,weareontracktoexceedthecarbonbudgettargettoreduceemissionsby34percentby2020.

Atthesametime,theUKiswell-placedtotakeadvantageofthehugeopportunitiesfromalow-carbonfuture.ContinuedGovernmentsupportforfinancingoflow-carboninvestmentsandjobcreationingreenindustries,meansthatwearealreadyaworldleaderinseveralkeylow-carbonsectors.

Butweshouldnotunderestimatethescaleofthechallengeinmovingtoalow-carboneconomy.Itrequiresstrongco-ordinatedactionbyGovernmenttoensurethateverysectoroftheeconomyplaysitsrole.Wemustalsoprepareforachangingclimateinthiscountry.Adaptationincursupfrontcostsbutitalsoreducesthedamageanddisruptioncausedbyclimatechange.Itoffersopportunitiestoadjusteconomicactivityorevenexpandintonewareas.TheclimatechangeplanspublishedtodaybyallmajorGovernmentdepartmentsdemonstratethatwearerisingtothesechallenges.

ThisplanshowshowtheTreasurywillbeattheheartofthetransition.ThroughthespendingcontrolandPublicServiceAgreementframeworkswewillhelptodrivedeliveryofemissionsreductions,insupportofthecarbonbudgetmanagementsystem.WewillensurethatclimaterisksaretakenintoaccountwhenGovernmentmakesinvestmentdecisions.Andwewillcontinuetoleadbyexampleinreducingemissionsfromourownbuildingsandtravel.Indoingso,wearelayingthefoundationsforsustainablelong-termgrowth.

RtHonAlistairDarlingMPChancelloroftheExchequer

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HMTreasuryClimateChangePlan|1

1 Introduction

1.1 Climatechangeisoneofthemostcriticalchallengesfacingtheworldtoday.Theevidencethathumanactionsarechangingourclimateiscompellingandtherisksofunmanagedclimatechangearehuge.

1.2 Theimpactsofclimatechangearealreadybeingfelt,throughchangedweatherpatternsandenvironmentalchanges,particularlyinpolarregions.Ifglobalactionisnottakentoreduceemissions,thesocial,environmentalandeconomicimpactsofclimatechangecouldbedevastating.Risingsealevelscouldthreatensmallislandstatesandputmillionsatriskofincreasedflooding.Atthesametime,changingprecipitationpatternswouldputcertainareasatincreasedriskfromseverewatershortagesanddrought.Risksoffoodshortagesandthespreadofdiseasearecommonlypredicted.Significantly,theeffectsofclimatechangearelikelytobefeltmoststronglyinthepoorestregionsoftheworld.

1.3 TheGovernment’sgoalistostabiliseatmosphericgreenhousegasconcentrationstoavoiddangerousclimatechange,andtoadapttotheclimatechangethatisnowinevitable.TheCopenhagenAccord,nowsignedbyover100countries,callsfortheglobaltemperaturerisetobekeptbelowtwodegreesCelsius.TheGovernmentisnowworkingtooperationalisetheAccord,toensurethattheworldmakesthesignificantreductionsinemissionsoverthecomingdecadesrequiredtoachievethisgoal.

The Climate Change Act and Adapting to Climate Change Programme

1.4 TheClimateChangeAct2008createdanewapproachtomanagingandrespondingtoclimatechangeintheUK.Thefirstofitskindanywhereintheworld,theActsetnotonlyalong-termtargetto

reducetheUK’sgreenhousegasemissionstoatleast80percentbelow1990levelsby2050,butalsoalegallybindingtrajectorytowardthistargetintheformoffiveyear‘carbonbudgets’.

1.5 TheActalsoenhancestheUK’sabilitytoadapttotheimpactofclimatechange,establishingthataUKwideclimatechangeriskassessmentmusttakeplaceeveryfiveyears;anationaladaptationprogrammemustbeputinplaceandreviewedeveryfiveyears;andtheGovernmenthasthepowertorequirepublicauthoritiesandstatutoryundertakerstoreportonhowtheyhaveassessedtherisksofclimatechangetotheirwork,andwhattheyaredoingtoaddressthoserisks.

1.6 AtBudget2009,theGovernmentannounceditwassettingthefirstthreecarbonbudgets–coveringtheperiodfrom2008-22–atlevelsrequiringa34percentreductioninemissionsby2020comparedto1990.Thesetargetscameintoforceon1June2009.InThe UK Low Carbon Transition PlanpublishedinJuly2009,theGovernmentsetoutitsstrategytomeetthebudgets.

1.7 Atthesametime,The UK Low Carbon Transition Plan allocatedUKgovernmentdepartmentstheirowndepartmentalcarbonbudgets,toensurethateverypartofgovernmentwillhelptodrivethetransitiontoalow-carboneconomy.Thesebudgetsreflectdepartments’influenceonreducingemissionsacrosstheeconomyaswellasemissionsfromtheirownestateandoperations.Alldepartmentscommittedtoproducingacarbonreductionplan,detailinghowtheywillachievetheircarbonbudgets.

1.8 TheGovernment’sAdaptingtoClimateChange(ACC)ProgrammebringstogethertheworkbeingledbytheGovernmentandthewiderpublicsector

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onadaptingtoclimatechange.TheProgramme’sobjectivesincludedevelopingamorerobustandcomprehensiveevidencebaseabouttheimpactsandconsequencesofclimatechange;raisingawarenessoftheneedtotakeaction;andworkingacrossgovernmentatthenational,regionalandlocalleveltomakesuretheneedtoadapttoclimatechangeisembeddedintogovernmentpolicies,programmeandsystems.

1.9 Aspartofthelatterobjective,eachgovernmentdepartmentcommittedtoproduceahighleveladaptationplan,focusingonthekeypolicyareasandactivitieslikelytobesignificantlyimpactedbyclimatechangeandwhichrequireaction.

1.10 ThisclimatechangeplanfulfilsbothcommitmentsbydescribingHMTreasury’sdepartmentalcarbonbudgetandhowweexpecttomeetit,andsummarisingouractiononadaptation.ItdescribeshowtheTreasurywillplayacentralroleinthedepartmentalcarbonbudgetsystem,inkeepingwithitsroleatthecentreofgovernment.TheplancoversthepoliciesandresponsibilitiesoftheTreasuryGroup–HMTreasury(withitsindependentoffice,theOfficeofGovernmentCommerce(OGC))anditsexecutiveagencies:theDebtManagementOffice,BuyingSolutionsandtheAssetProtectionAgency.1

The Treasury’s approach to climate change

1.11 AstheGovernment’sfinanceandeconomicsministry,theTreasuryhastwodepartmentalstrategicobjectives:

1. maintainingsoundpublicfinances;and

2. ensuringhighandsustainablelevelsofeconomicgrowth,well-beingandprosperityforall.

1.12 Akeyoutcomeunderpinningthesestrategicobjectivesisprotectingtheenvironmentinaneconomicallyefficientandsustainableway.This

1Forthepurposesofthisplan,NationalSavingsandInvestmentsandtheRoyalMintdonotformpartoftheTreasuryGroup.

reflectsthefindingsofThe UK economy: analysis of long-term performance and strategic challenges2,whichidentifiedenvironmentalchange,particularlyclimatechange,asoneofthekeytrendsthatislikelytohaveasignificantimpactontheeconomyinthelong-term.

1.13 Climatechangedemandsurgentandco-ordinatedglobalaction.TheSternReviewfoundthatstabilisinggreenhousegasconcentrationsatlevelslowenoughtoavoidtheworstimpactsofclimatechangewouldrequirerapidandsubstantialreductionsinglobalemissions.3TheReviewconcludedthatthebenefitsofthisstrongandearlyactionfaroutweighthecosts.Further,theReviewfoundthatanadaptationstrategyiscrucialfordealingwiththeunavoidableimpactsofclimatechange,asitistheonlyresponseavailablefortheimpactsthatwilloccuroverthenextseveraldecadesbeforemitigationmeasurescanhaveaneffect.

1.14 TheTreasuryhasakeyroleinensuringclimatechangeistackledascost-effectivelyaspossible,contributingtosustainedandsustainablegrowth.Thiswillbeachievedbyefficientreductionofglobalemissionsthroughaninternationaldealandglobalcarbonmarket:awell-designedcarbonmarketcouldreducethecostsofaddressingclimatechangebyupto70percent.4TheTreasuryalsoensuresdomesticpoliciesonbothmitigationandadaptationareeffective,efficient,valueformoney,andaffordablewithinoverallfiscalconstraints,includingthroughappropriateuseoffiscalinstruments.

The role of the Treasury in delivering carbon budgets

1.15 The UK Low Carbon Transition PlanannouncedthattheTreasurywouldplayakeyroleattheheartofthecarbonbudgetsystem.Thisplanexplainsthatthisroleinvolves:

2 The UK economy: analysis of long-term performance and strategic challenges,HMTreasury(2008).3 SternReview:Theeconomicsofclimatechange,HMTreasury(2006)4 GlobalCarbonTrading:Aframeworkforreducingemissions,MarkLazarowiczMP(2009).


• helpingtomaketherightpolicychoices;

• supportingefficientdeliveryacrossgovernment:workingwithothergovernmentdepartments;

• workingtowardsaninternationaldealtoreduceemissions;

• integratingclimatechangeintofiscalandeconomicpolicy;

• providingleadershipondeliveryofsustainabilitytargetsandsustainabilityreportingacrossgovernment;and

• reducingtheTreasury’sowncarbonfootprint:deliveringitscarbonbudget.

1.16 Thefollowingtwochaptersofthisplandescribetheserolesinmoredetail:Chapter2detailstheTreasury’swiderrolewhileChapter3focusesonhowwewilldeliverreductionsonourownestateandoperationstomeetourcarbonbudget.

The role of the Treasury in adapting to climate change

1.17 TheTreasuryisalsocommittedtoplayingacentralroleinhelpingtheUKtoprepareandadapttochangesintheclimate.ThisplanoutlinestheTreasury’sobjectivesto:

• determineandminimiseoverallcoststotheeconomyforconsumersandbusinessofmaintainingsufficientlevelsoflong-termadaptation;andtocreateconditionstopromoteopportunitiesandminimisecostsforspecificsectors,includingthefinancialservicessectorforwhichtheTreasuryhasspecialresponsibility;

• Ascertainandminimiselikelyimpactsonthepublicfinancesoflonger-termriskmanagementrequiringinvestmentinconstructionandmaintenanceofcommoninfrastructure;andfromtheneedtoprovideassistancetohouseholdsandbusinessesduetoextremeclimateevents;and

• ensurevalueformoneyinpublicexpenditurebyrequiringclimatevulnerabilitytobetakenintoaccountinplanningandfinancialdecisionsmadebytheGovernment,includingprocurementprocessesanddevelopingandmaintainingitsestates.

1.18 Chapter4outlinesthechallengesthatclimatechangeimpactspresenttotheeconomyandthepublicfinancesandconsiderstheunderlyingevidencebase,whileChapter5describestherolesandresponsibilitiesfortheTreasuryinUKadaptationpolicy,howtheTreasuryisbuildingdepartmentalcapabilitytodealwithadaptationpolicyissuesandhowclimatechangeimpactsaretakenintoaccountonitsownestate.

Treasury’s delivery framework

1.19 TheTreasuryMinisterresponsibleforclimatechangeandadaptationissuesistheExchequerSecretary.In2008TreasuryestablishedaninternalTreasuryEnvironmentNetwork(TEN),tostrengthenthedepartment’scapabilityandconsistencyofadviceonenvironmentalpolicy,andtomonitorandreportperformanceontheenvironmentalDSOoutcome.Thiscross-cuttingvirtualenvironmentdirectoratebringstogetherTreasury’sinterestsonclimatechangeandenvironmentalpolicy,andisledbytheDirector,PublicServicesandEnvironment.

1.20 TENreportsmonthlytotheEnvironmentSteeringGroup,chairedbytheDirector,PublicServicesandEnvironment,whichoverseesprogressagainsttheenvironmentDSOandprovidesstrategicdirectionandchallengetothenetwork.

1.21 TheDirector,PublicServicesandEnvironmentisalsotheSeniorResponsibleOwnerfortheTreasury’sCarbonReductionDeliveryPlanandDepartmentalAdaptationPlan.HeisresponsibleforoverseeingdeliveryoftheTreasurycarbonbudgetandactiononadaptation,andforreportingtothedepartment’smanagementboardonprogress.HeissupportedinthisrolebyTENpolicyteams,andestatesandprocurementteamswithintheCorporateServicesDirectorate.


1.22 TheTreasurywillreportquarterlyprogressagainstitscarbonbudgettotheOGC,throughtheexistingmechanismsforreportingagainsttheSustainableOperationsontheGovernmentEstate(SOGE)targets.ThisinformationisavailableontheOGCwebsite.TheOGCwillcontinuetopublishanannualreportsummarisingalldepartments’progressinDecember.

1.23 TheTreasurywillprovideupdatesonprogressonitsadaptationactionstotheDefraACCProgrammeTeam,whowillco-ordinateanannualreporttoCabinet,throughtheEconomicDevelopment(EnergyandEnvironment)Committee.TheTeamwillalsopublishanannualupdateontheACCwebsite.Updateswillcompriseaself-assessmentofprogressagainstactionsandmilestones,withrefreshedactionswherenewprioritieshavebeenidentifiedduringtheyear.

Working with others across government

1.24 TheTreasuryworkscloselywithothersingovernmenttosupportthedevelopmentanddeliveryofclimatechangeandenergypolicy,andinthisrolecontributesasadeliverypartnertoPSA 27 Lead the global effort to tackle dangerous climate change.TheTreasuryisamemberoftheDeliveryAndStrategyHigh-level(DASH)Board,whichoverseesdeliveryofPSA27,aswellastheNationalClimateChangeandEnergyProgrammeBoard,theInternationalClimateChangeandEnergyProgrammeBoard,theDomesticAdaptationProgrammeBoard,andthecross-departmentalCarbonBudgetsWorkingGroup.TheTreasuryisalsoamemberofallsectorworkinggroupsthathavebeenestablishedtoensuredeliveryofemissionsreductionsthroughcollaborativeworking.

1.25 AdiagramofhowtheTreasury’sinternalgovernancestructureslinktothewidergovernmentcarbonbudgetsgovernancestructuresissetoutbelow:

Treasury Environment Network

Environment Steering Group

HM Treasury Ministers

HM Treasury SRO

Department X SRO

Department X SRO

Department X SRO

Department X SRO

Sector working groups

Cross-Whitehall carbon budgets working group

SRO for UK carbon budget

National Programme Board (high level reporting only) DASH Board ED (Cabinet Committee)


2.1 TheTreasuryistheUK’seconomicsandfinanceministry,responsiblefordevelopingandimplementingtheGovernment’sfinancialandeconomicpolicy.Itsaimistoraisetherateofsustainablegrowth,andachieverisingprosperityandabetterqualityoflifewitheconomicandemploymentopportunitiesforall.

2.2 TheTreasuryworkswithandthroughawiderangeofstakeholderstoachieveitsobjectives.Initsfinanceministryrole,theTreasuryworkswithothergovernmentdepartmentstomaintaincontrolofpublicspendingandtoimprovefinancialmanagementcapabilityingovernment.Initseconomicministryrole,itworksthroughothergovernmentdepartmentstodeveloppoliciestoadvancegrowthintheUK,raiseproductivityandpromoteopportunity,socialjustice,stabilityandsecurityforall,intheUK,Europeandinternationally.

2.3 TheTreasurywilluseitscross-cuttingroleatthecentreofgovernmenttosupportdepartmentsindeliveringtheUKcarbonbudget.Itwillalsocontinuetoconsiderhowfiscalinstrumentscancontributetomeetingcarbonbudgets,andworktowardscost-effectiveinternationalactiontoreduceemissionsthroughaglobalcarbonmarket.ThroughtheOGC,theTreasuryprovidesleadershipondeliveryagainstthesustainabilitytargetsrelatingtotheGovernment’sownestateandprocurementactivities(includingtheownestateportionofdepartmentalcarbonbudgets).Theserolesaresetoutmorefullybelow.

Making the right policy choices2.4 TheGovernmentiscommittedtoapolicyframeworkthatadoptsthemostcost-effectivewaystoreduceemissions.Thiswillminimisetheeconomic

costofmeetingUKemissionstargetsandalsominimisetheimpactonthepublicfinances.

2.5 ToensurethattheUK’scarbonbudgetsandlong-term2050targetaremetinanefficientway,theGovernmenthasadoptedthethreepillarsforpolicyactionsetoutintheSternReview:1

• pricingcarbonthroughtrading,taxorregulation–incentivisinglow-carboninvestmentchoicesintheprivatesectorandensuringthatemissionsreductionsaredeliveredinthemostcost-effectiveway;

• supportinginvestmentinlow-carbontechnologiesandinfrastructure;and

• tacklingbarrierstoaction,includingpoliciestoencouragelong-termbehaviouralchangeandenergyefficiency.

2.6 AstheUK’seconomicsandfinanceministry,theTreasuryplaysakeyroleinensuringthecost-effectiveness,efficiency,equity,andfiscalsustainabilityoftheoverallpolicyapproachtomeetingcarbonbudgets,workingcloselywithpolicyofficialsinothergovernmentdepartments.

2.7 Consumer-fundingmechanisms,suchastheRenewablesObligationorFeed-inTariffs,arebecominganincreasinglyimportantpartoftheclimatechangepolicyframework.Thesepoliciesinvolvesubsidisinglow-carbonenergyinvestmentsthroughimplicitorexplicitlevies,usuallyfallingonenergysupplycompanies,whothenpassthecoststhroughtoconsumersthroughhigherbills.TheTreasuryhasaroleinagreeingthelevelofsupportthroughsuchmechanisms,becausetheygenerally

1Stern Review: The economics of climate change,HMTreasury(2006).

2 The Treasury’s role in delivering carbon budgets


amounttonewtaxandspendingcommitments.Thisisinorderto:

• maintainfiscalcontrolandcredibilitybytakingaccountofthewiderfiscalpositionandjudgment;

• ensurethatthemechanismsoffermaximumvalueformoney;

• understandtheoveralleconomicanddistributionalimpactsoftaxandspendingpolicies;and

• maketherighttrade-offsacrossgovernmentpriorities.

Role of taxation

2.8 TheTreasuryisresponsibleforformulatingtheGovernment’staxpolicy.Environmentandtransporttaxescanplayasignificantroleinreducingcarbonemissions,butalsoneedtomeettheprinciplesofgoodtaxation.Taxesandtradingschemesareconsideredasoneoptionalongsidearangeofotherpolicyoptionssuchasregulation,information,publicspending,tradablepermitschemesandvoluntaryagreements.

2.9 Environmenttaxesandothereconomicinstrumentsareparticularlyeffectiveincorrectingmarketfailureswheretherearenegativeexternalitiesthatarenotcurrentlyreflectedinprices.Forexample,settingacarbonprice,thekeypolicyinstrumentfortacklingclimatechange,canbedoneimplicitlythroughregulation,orexplicitlythroughtaxoremissionstrading.Explicitpricingisgenerallymoreefficientasitallowsbusinessesthatcancutemissionsmostcheaplytoundertakemostoftheeffort.Italsoprovidesacontinuousincentiveforbusinessestoinvestinlow-carbontechnologies,ratherthanonlyprovidinganincentiveuptoaspecificstandard.

2.10 PolicyinthisareaisguidedbythreeoftheoutcomesundertheTreasury’sDepartmentalStrategicObjectives:

• protectingtheenvironmentinaneconomicallyefficientandsustainableway;

• ensuringthatthetaxyieldissustainableandrisksmanaged;and

• promotingtheefficiencyandfairnessofthetaxsystem.

2.11 AssuchtheTreasuryaimstodeveloptaxoptionsthatsupporttheGovernment’senvironmentpolicy,whilemaintainingsoundpublicfinances.Taxpolicychangesalreadyannouncedwillsavearound3MtCO2in2013-14,mainlythroughincreasesinfuelduty,airpassengerdutyandlandfilltax,helpingtheUKmeetitscarbonbudgets.

2.12 TheTreasuryhassetoutitsstrategicapproachtoenvironmentaltaxationbefore:

• Statement of Intent on Environmental Taxation(1997)–statedthattheGovernmentwouldaimtoreformthetaxsystemtoshifttheburdenoftaxfrom‘goods’(e.g.employment)to‘bads’(e.g.pollution).Italsomadeclearthatenvironmentaltaxationmustmeetthetestsofgoodtaxation(e.g.economicefficiencyandfairness,maintaininglong-termsustainabilityofpublicfinances;deliverabilityandeffectiveriskmanagement).

• Tax and the Environment: Using Economic Instruments (2002)–setouttheframeworkforusingthetaxsystem–aspartofawiderrangeofinstrumentstocontributetoaneffectiveenvironmentalpolicy.Thissetouttheimportanceofimplementingthe‘polluterpays’principle,whilstalsomakingsurethatactionstoprotecttheenvironmentalsosupportwidereffortstoprogresstheGovernment’smaineconomicobjectiveofstrongandstableeconomicgrowth.

• Inthe2005Pre-BudgetReport,theGovernmentreiterateditscommitmenttothisframeworkbysettingoutitsPrincipledApproach,whichdistilsthekeycriteriaforenvironmentaltaxstrategygoingforward.

2.13 AnoverviewofcurrentenvironmenttaxesissetoutinTable2.A,includingtheirroleinhelpingtheUKmeetitscarbonbudgets.TheTreasurywillcontinuetoexploretheuseofeconomicinstrumentstoachieveclimatechangegoals,inthecontextofotherlong-termfiscal,economicandsocialobjectives.


Tax Revenue 2008-9 Rationale and Reform Action to meet carbon budgets

Power and heavy industry

EUEmissionTradingSystem(EUETS)

£400million* EUETScoversheavyindustriesandpowergenerators,whichareresponsibleforaroundhalfofEUemissions.

TheUKisoneofthefewcountriestoholdregularcarbonauctions.Upto10percentofUKemissionsallowanceswillbeauctionedduringPhaseIIoftheEUETS–runningfrom2008to2012.

TheEUETSisexpectedtodeliverannualcarbonsavingsof51MtCO2in2020fortheUK–areductionintheemissionsofthepowersectorandheavyindustryof22percenton2008levels.

Climatechangelevy(CCL)

£700million Taxonbusinessandpublicsectorenergyconsumptiontoencouragetheefficientuseofenergy.Since2007CCLhasincreasedinlinewithinflationeveryyear.InPBR09itwasannouncedthatthereducedrateofCCLavailabletoparticipantsintheclimatechangeagreements(CCAs)schemewouldincreasefrom20to35percentinApril2011.

Budget2009announcedtheextensionoftheCCLexemptionforindirectsalesofCHPelectricityto2023,subjecttoStateaidapproval.In2010,thelevyisestimatedtohavereducedenergydemandinthebusinessandpublicsectorbyaround15percentandgoingforwardwilldeliveremissionsreductionsof12.8MtCO2perannum.

Table 2.A: Environment taxes

*ThisrepresentsallrevenuegeneratedthroughtheauctioningofEUAstodate.AuctioningbeganinNovember2008.



Homes and communities / Workplaces and jobs

Taxreliefs N/A Certainenergy-savingandwater-efficientplantandmachineryqualifyfor100percentenhancedcapitalallowances(ECAs),offeringpurchasersofthisequipmenttheabilitytodeductthefullcostfromtheircorporatetaxliabilityinthefirsttaxyear.

ReducedratesofVAT(5percent)applytotheprofessionalinstallationofcertainenergysavingmaterialswithinhomes,includinginsulationandsomemicrogeneration.

Toovercomethelackofincentivesforlandlordstoinvestinenergyefficiency,theLandlordsEnergySavingAllowanceallowslandlordstodeductupto£1,500perhousefromtheirtaxablepropertyincomeforthecostofinstallingspecifiedenergysavingitems.

Smallreductionsincarbondioxideemissions.

Waste

Landfilltax £955million Landfilltaxincreasesthepriceofdisposaltolandfill,encouraginginvestmentinenvironmentallysustainablewastemanagementoptionshigherupthewastehierarchysuchasrecycling,reuse,andrecoveryofenergyfromwaste(e.g.incinerationandanaerobicdigestion.)

Budgets2009and2010announcedincreasestothestandardrateoflandfilltaxof£8pertonneon1Aprileachyearfrom2011to2014respectively.


consumerstomakeefficientchoices.2TheTreasurycontinuestoworkwiththeDepartmentforTransporttoachievethesegoals,andisalsoresponsiblefortransporttaxpolicy.Whiletheprincipalpurposeoftransporttaxesistosupportthepublicfinancesandraisefundsforpublicservices,wherepossibleandappropriateitisrightfortherevenue-raisingtaxestosupportenvironmentalobjectives.

2Low-carbon transport: a greener future,DepartmentforTransport(2009).


Fuelduty £24.6billion Fueldutyhasincreasedonanumberofoccasionssince1997andasofSeptember2009,standsat56.19penceperlitre(ppl)forpetrolanddiesel.Itwillincreaseto57.19pplon1April2010.

Budget2009announcedthat–tosupportfiscalconsolidation–fueldutywouldincreaseby1pplinrealterms,eachAprilfrom2010to2013.Budget2010announcedthatthe2010increasewouldbestagedinthreeparts,andfueldutywouldalsoriseby1pplinrealtermsin2014.Increasesfrom2010to2014areestimatedtosave1.7MtCO2peryearin2014.

Vehicleexciseduty(VED)

£5.6billion In2001,VEDwasplacedonaCO2basis,withthetaxthatacarpaysdeterminedbyitsCO2emissions.InApril2009thenumberofVEDbandswasincreasedto13.

FromApril2010newfirst-yearratesofVEDwillbeintroduced,toprovideastrongersignalatthepointofpurchase.Carsemittingunder130gCO2perkmwillpaynothinginthefirstyear,whereascarsemittingover255gCO2perkmwillpay£950.

Companycartax*(CCT)andFuelbenefitcharge

£2.3billion* CCTwasreformedin2002,sothattheamountpaiddependsupontheCO2emissionsofavehicle.

In2010,2011and2012,CCTthresholdswillfallby5gCO2perkminresponsetoadvancesinfuelefficiency.FromApril2010,zero-emissionvehicleswillbeexempt,andultralow-carbonvehiclessubjecttoa5percentrateofCCTforfiveyears.

Capitalallowancesforvehicles

n/a InApril2009thecapitalallowancetreatmentforbusinesscarswasalsoplacedonanemissionsbasis,andthereisa100percentfirst-yearallowanceforcarswithCO2emissionsnotexceeding110gCO2perkm.

FromApril2010,a100percentfirst-yearallowancewillalsobeintroducedforelectricvans.

Airpassengerduty £1.9billion APDwasreformedinNovember2009,increasingthenumberofdistancebandsfromtwotofour,tobetterreflecttheenvironmentalimpactofflying.

ThereformandannouncedrateincreasesinNovember2009and2010willhelpleadtosavingsof0.6MtCO2peryearby2011-12.

Table 2.B: Transport taxes

*Notaseparatetaxbutabenefit-in-kindincurredunderincometaxandnationalinsurancecontributions,whenanemployerprovidesacompanytoanemployeefortheirpersonaluse.Asbenefit-in-kindchargesarereportedseparately,latestfiguresarefor2007-08.

Transport taxation

2.14 Transportplaysavitalroleinsupportingeconomicgrowthbutcanalsohaveadverseenvironmentalimpacts.TheGovernmentiscommittedtomovingtowardsalow-carbontransportsystem,throughsupportingthedevelopmentofgreentechnologiesandprovidingtherightsignalstoallow


Supporting efficient delivery of carbon budgets and energy policy across governmentDriving delivery across government

2.15 TheTreasuryoverseestheframeworkfortheplanning,controlandreportingofpublicspending,andassuchactsasacriticaldriverofdeliveryandimprovementinoutcomesacrossgovernment.

2.16 2007CSRsetoutareformedcross-governmentframeworkforperformancemanagementanddeliveryacrossgovernment,intheformofnewPublicServiceAgreements(PSAs).TheTreasuryoverseesthisframework,workingwithdepartmentstoagreethePSAs,thatsummarisepriorityoutcomestheGovernmentwantstoachieveinthenextspendingperiod.TheseincludePSA27–Lead the global effort to avoid dangerous climate change,whichsetsoutagreedobjectivesdetailingtheoutputsandoutcomesdepartmentsareexpectedtodeliveronclimatechangewiththeresourcesallocatedtothem.ThePrimeMinister’sDeliveryUnit,whichsitswithintheTreasury,isresponsibleforsupporting,monitoringandchallengingprogressbydepartmentsontheclimatechangePSA,andreportingonprogresstothePrimeMinisterandChancellor.

2.17 ThenextSpendingReviewwillsetdepartmentalbudgetallocationsforthecomingyears.Aspartofthisprocess,theTreasurywillhelptoensurethatdepartmentsplanforandallocatesufficientresourcetodeliveryofcarbonbudgets,throughthenextSpendingReviewandbeyond.AspartofbidstothenextSpendingReview,departmentswillbeexpectedtoincludetheirplanstodelivertheirdepartmentalcarbonbudgets.Alongsideothercostpressuresandopportunitiesforsavings,theTreasurywilltakeaccountofthelikelycosttodepartmentsofdeliveringcarbonbudgetsandthesavingsthatcanbegeneratedthroughlow-carbonactivity,suchasimprovedenergyandresourceefficiency.TheTreasurywillalsoencouragedepartmentsworkingthroughdevolved

deliverychainstolinkcapitalbudgetallocationstoperformanceonemissionsreductions.

Energy market framework

2.18 TheTreasuryworkscloselywiththeDepartmentforEnergyandClimateChange(DECC)toensuretheenergymarketandpolicyframeworksupportsthenecessaryinvestmentinlowcarbontechnologiesanddeliverssecureandaffordableenergysupplies.TheTreasuryisworkingwithDECCtoensuretheseframeworkscanbestsupportthelong-termtransitiontoalowcarbonenergymixandensureafairdealforconsumers.InterimfindingsofthisworkwerepublishedatBudget2010.AtBudget,theGovernmentcommittedtobringforwardproposalsforchangestothecurrentenergymarketframeworkforconsultation,andtomakefinaldecisionsinSpring2011.TheTreasurywillcontinuetoworkcloselywithDECConthesecondphaseofthisproject.

Working towards an international action to reduce global emissions2.19 TheUK’spriorityistoagreeanambitious,effectiveandfairglobaldealthatensuresglobalemissionsstarttodeclineby2020andfalltoatleast50percentbelow1990levelsby2050.ThiswillputtheworldonapathtolimitingtemperaturerisestolessthantwodegreesCelsius.TheTreasuryworksjointlywithothergovernmentdepartmentstodelivertheUK’scontributiontothisgoal,especiallytoensurethatpoliciesarewell-designedfromaneconomicperspectiveandfiscallyaffordable.

2.20 TheUKhasbeeninstrumentalindeliveringprogressoninternationalclimatechangeCopenhagenwasanimportantandnecessarystepforward:theCopenhagenAccordagreestotakeactiontoholdtheincreaseinglobaltemperaturesbelow2degreesandincludessignatoriesfromover100developedanddevelopingcountries.TheUKcontinuestoshowgloballeadershipbycommittingtoreduceemissionsbyatleast34percentby2020on1990levels,andmoreiftheEUmovestoa


30percenttargetby2020,intheeventofsimilarlyambitiouscommitmentsfromothercountries.

2.21 TheAccordalsoprovidesfinancetohelpdevelopingcountriestackleandadapttoclimatechange.Developedcountrieswillstartbyproviding$30billionoffaststartpublicfinancebetweennowand2012,including£1.5billionfromtheUKaspartofanoverallEUcontributionof$10billion.TheAccordalsosetsagoalforpublicandprivateflowsofclimatefinancetodevelopingcountriestoreach$100billionperyearby2020.ThePrimeMinisterwillco-chair,withPrimeMinisterMelesofEthiopia,ahigh-leveladvisorygroup,whichwilllookatwaysofmeetingthis2020goal.TheTreasuryworksinconjunctionwiththeDepartmentforInternationalDevelopment(DfID)andDECCtowardstheeffectivedeliveryofthesefundstoensuretheydeliverrealresultsontheground.

2.22 Globally,carbonmarketsprovideameansforminimisingeconomiccostsbyensuringthatreductionstakeplaceinthemostcost-effectivelocationsworldwide.EmissionstradingschemessuchastheEUEmissionTradingSystemenablecompaniestochoosewhethertoreducetheirownemissionsorinvestinemissionsreductionsoverseas.Awell-designedandexpandedglobalcarbonmarketcouldreducetheglobalcostsofaddressingclimatechangebyupto70percent,andinthecontextofanambitiousdeal,couldgeneratesignificantfinancialflowstodevelopingcountries.

2.23 Inlinewithitscommitmenttoexpandingtheglobalcarbonmarket,theUKistheonlyEUcountrytoholdregularcarbonauctionsunderPhaseIIoftheEUEmissionTradingSystem.TodateUKauctionshaveraisedover£350million,providingsupporttofundgovernmentspendingpriorities,includingontheenvironment.Londonistheglobalcentreofthecarbonmarket:eightysevenpercentofallinternationalcarbontradingnowoccursinLondon.

Integrating climate change into fiscal and economic policy2.24 The UK economy: analysis of long term performance and strategic challengesidentifiedenvironmentalchange,particularlyclimatechange,asoneofthekeylong-termeconomictrendsthatwillshapetheUKeconomyinthefuture.Movingtoalow-carboneconomywillcreateopportunitiestobeexploitedaswellaschallengestobemet,requiringtheUKeconomytobeflexibleandinnovative.

Understanding economic impacts of climate change policy

2.25 TheTreasuryhasledextensiveworktoassessandunderstandtheeconomicandfiscalimpactsandopportunitiesofclimatechangeandpolicyactiontotackletheissue.In2006,theTreasurycommissionedtheSternReview3ontheEconomicsofClimateChange,themostcomprehensivereviewevercarriedoutontheeconomicsofclimatechange,ledbyLordStern,thenHeadoftheGovernmentEconomicServiceandformerWorldBankChiefEconomist.TheReviewestimatedthattheeconomiccostofactiontotackleclimatechangecouldbelimitedat1to2percentofworldGDP.Thisissignificantlylessthantheglobalcostofuncontrolledclimatechange,whichtheReviewestimatedtobebetween5percentand20percentofannualworldGDP–ithassincebeensuggestedthatthiscostcouldbehigherstill.Chapter4setsoutmoredetailonpotentialimpactswithintheUK.

2.26 Fromadomesticperspective,The UK Low Carbon Transition PlanestimatedthatmeetingtheUK’stargetof34percentreductioninemissionsby2020wouldreducethelevelofGDPbyabout0.35percentin2020.4Treasuryiscontinuingtoworkonintegratingtheimpactsofclimatechangepoliciesintoitsnear-termeconomicgrowthandfiscalforecasts.

3Stern Review: The economics of climate change,HMTreasury(2006).4The UK Low Carbon Transition Plan,HMGovernment(2009).


2.27 Alongsidethe2009Pre-BudgetReporttheTreasurypublisheditsLong-term public finance report: an analysis of fiscal sustainability,whichforthefirsttimeexplicitlysetoutprojectionsfortheimpactsofthecostsoftacklingclimatechangeonthepublicfinances.Thisconcludedthatwhilepolicytoreduceemissionsislikelytohaveeconomicimplications,theindirectpressureonthepublicfinancesthroughitseffectoneconomicgrowthislikelytobemodest.

Exploiting opportunities for economic growth

2.28 Whiletacklingclimatechangehaseconomicimpacts,italsobringssignificantopportunitiesforfuturebusinessgrowth,andthepotentialtobeaworldleaderinthelow-carbonandenvironmentalsectors,estimatedtobeworth£3trillionglobally.Changesintherelativepricesofcarbonandenergy-intensivegoodswillalterhouseholdandfirmconsumptiondecisionsinfavouroflessenergyintensiveorlower-carbonoptions.Thisstimulustodemandforlow-carbongoodsandserviceswillleadtoashiftinproductionandemploymentawayfromcarbonorenergyintensivegoodsandtowardscleaner,low-carbongoodsandservices.

2.29 ThistransitiontoalowcarboneconomyintheUKwillcontinuetodriveinnovation,aswilltheeconomicopportunitiesarisingfromexpandingglobalmarkets,andtheGovernmentisalreadydoingmuchtostimulatethis,forexamplethroughtheprovisionofEnhancedCapitalAllowancesforenergyefficientgoodsandtheSMEtaxcreditscheme.Thisrequirementtoinnovate,drivenbyclimatepolicyandcommercialopportunity,isalreadystimulatingresearchanddevelopmentinlow-carbontechnologies;andthedeploymentofmaturelow-carbontechnologiescouldpotentiallyleadtoanewwaveofinnovationasproductionandservicesadjusttotakeadvantageofthenewopportunitiesofferedbythesetechnologies.Thisinnovation-ledtechnologicalchangecoulddrivejobcreation(itisestimatedthatthesectorcouldincrease

by45percentontoday’slevelsby2015)5andproductivityimprovements,underpinninglong-termeconomicgrowththatinturnisvitaltomaintainthesustainabilityofthepublicfinances.

2.30 TheTreasuryhasacentralroleinensuringthattheUKharnessesthebenefitsofthelowcarboneconomyforfuturegrowth.Budget2009andthe2009Pre-BudgetReportannounced£1.8billioninsupportforlow-carbonsectors,drivinglow-carboninvestmentacrosstheeconomy,andsupportingfuturegrowth.ThisincludedsettingupInfrastructureUK(IUK)toleveragefurtherinvestmentinlowcarbonprojectsandhelptheGovernmenttodevelopanationalinfrastructurethatcompetesinternationally,underpinseconomicgrowth,andattractsinvestment.Already,measuresintroducedbytheGovernmentsinceSeptember2008,couldsupportover£15billionadditionalinvestmentinlowcarbonandenergysectorsoverthenextthreeyears.

Leadership on sustainability 2.31 TheOGCisanindependentofficeoftheTreasury,withresponsibilityforleadingondeliveryagainsttheenvironmentaltargetsrelatingtoGovernment’sownestateandprocurementactivity.TheroleofChiefSustainabilityOfficerwasestablishedwithinOGCin2008toprovideleadershipondeliveryacrossgovernment,supportedbyaCentreofExpertiseinSustainableProcurement(CESP).TheteamisgearedtohelpingtheGovernmentachieveitstargetsforsustainableprocurementandoperationsonthegovernmentestate,andingeneraltoimprovingsustainableprocurementandoperationspracticeacrosscentralgovernment.Forexample,OGChasmodifieditse-PIMSdatabasetoenabledepartmentstomovetoquarterlycollectionofsustainabilitydata,allowingmoretimelyandeffectivemanagementofperformance.

5Low Carbon and Environmental Goods and Services: an industry analysis,Innovas(2009).


2.32 OtherpartsoftheOGCalsoplayakeyrole,includingtheGovernmentEstateTransformationteam,whichensuressustainabilityisembeddedinthestrategicmanagementofdepartments’property,andProcurementPolicy,whichsupportsdepartmentsintakingaccountofenvironmental,socialandeconomicsustainabilityintheirprocurementdecisions.Inthe2009Pre-BudgetReporttheGovernmentannouncedthatresourceefficiencyfocusingoncarbonreductionwouldbeoneofitsthreeprioritypoliciestobedeliveredthroughprocurement,andinJanuary2010theGovernmentpublishedaPolicythroughProcurementActionPlansettingouthowitwoulddeliverthesepriorities.

2.33 InAugust2008theGovernmentpublishedaDeliveryPlanthatbroughttogetherallitscommitmentstoachievesustainabilityacrossprocurementactivityandtheoperationsofitsestate.ItalsodetailedtheactionsthattheGovernmentwouldtaketoensurethesetargetsaremet.CESPreportsprogressagainsttheDeliveryPlaninsix-monthlyupdates,andsetsouttheprioritiesforhelpingtomeetthetargets.

2.34 ThelatestDeliveryPlanUpdateshowsexcellentprogressduring2008/09,particularlyinreducingemissionsfromgovernmentoffices–theGovernmentisnowontracktoexceeditstargetofreducingemissionsby12.5percentby2010-11relativeto1999-2000levels.Reducingtotalemissionswillremainakeyprioritygoingforward:theUpdatehighlightsplansforaprogrammeofimprovementstosupportachievementofthetargetsforSustainableOperationsontheGovernmentEstate(SOGE).

Energy efficiency in the wider public sector

2.35 The2009Pre-BudgetReportunderlinedtheGovernment’scommitmenttoshowingpublicsectorleadershipongreenhousegasemissions,announcingthattheGovernmentwillaimtoachievesavingsof£300millionperyearby2012-13throughimprovingenergyefficiencyacrossthepublicsector,cuttingenergybillsbyaround10percentandcontributingtoclimatechangegoals.

2.36 Tosupportdeliveryofthisobjective,Budget2010announcedthattheGovernmentwouldextendthescopeandremitoftheChiefSustainabilityOfficerandOGC’sCESPtoprovideleadership,challengeandsupporttothewiderpublicsectoronenergyefficiency,workingwithexistingdeliverybodiestoensureacoordinatedapproach.ThisisanaturalfitwithOGC’sexistingrolesinreducingcentralgovernmentdepartments’environmentalimpacts,drivingvalueformoneyacrossthepublicsectorthroughcollaborativeprocurementofenergyandsupportingthedevelopmentofregionalstrategiesforthesustainablemanagementofestatesassets.

2.37 WorkingcloselywithTreasuryandDECC,OGC’snewrolewillbetoensureenergyefficiencyisapriorityacrossthepublicsectorandcoordinatethedeliveryofsupporttoovercomethecommonbarrierswhichpreventenergysavingspotentialbeingrealised,including:

• leadership–byengagingtheprofessionalcommercialandestatescommunitiessotheyunderstandthefinancialrisksofinactionandensuretheyprioritiseenergysavingthroughclearperformancemanagementincentives;

• accesstocapitalbudgets–byrequiringdepartmentstoincludeplanstodeliverdepartmentalcarbonbudgetsintheirbidstothenextSpendingReview,andencouragingthemtolinkcapitalallocationstotheirdeliverybodiestoenergyperformance;and

• skillsandcapacity–bybringingtogetherthecollectedexpertiseandknowledgeonbestpracticeandinnovationinthepublicsectorandensuringitissharedmoreeffectivelythroughthedevelopmentofstandardtoolsandframeworks.

2.38 Inthemediumtermthisprogrammewilllooktodrivelargescaleinvestmentandretrofitofthepublicsectorestatethroughnewandexistingcontracts(includinginfacilitiesmanagement)andleveragingprivatesectorexpertisetodeliverguaranteedsavingsforthepublicsectorthroughenergyperformancecontracts.


2.39 OGC,TreasuryandDECCwillnotbeabletodeliverthisalone–otherleadbodiesinthepublicsectorwillneedtoengageandcollaborateonthisprogrammeifenergyefficiencyistobeembeddedacrosstheestatesandprocurementprofessions.AnupdateonprogresswillbereportedinthenextGovernmentDeliveryPlanUpdate.

Sustainability reporting in the public sector

2.40 Tohelpdriveimprovementsinenvironmentalsustainabilityacrossthepublicsector,theTreasuryisleadingworkondevelopingamodelforreportingsustainabilitybythepublicsector,workingcloselywithOGC,DECCandDefra.TheTreasuryisproposingtomandatetheintroductionofsustainabilityreportswithincentralgovernmentAnnualReportsandaccountsfrom2011-12,withadryrunfrom2010-11.Thereportingrequirement,coveringgreenhousegasemissions,wasteminimisationandmanagementandtheuseoffiniteresources,willbealignedwiththerevisedSOGEreportingrequirements.Greatertransparencyandaccountabilityonenvironmentalsustainabilityshouldleadtoreduceduseofenvironmentalresourcesandreducedcosts.


3 Delivering the Treasury’s carbon budget

The Treasury’s carbon budget3.1 TheTreasuryiscommittedtodeliveringrealemissionsreductionsonitsownestate,andhasastrongtrackrecordinmakingsignificantreductionsoverthelastdecade,aspartofawiderefforttoimproveenvironmentalsustainability.

3.2 TheTreasury’smainmeasuredsourcesofcarbonemissionsarefromitsestateandtravel.Theformerarisethroughtheconsumptionofelectricity,usedofgasforheatingandfromasmallamountofoiluseforback-upelectricitygeneration.At1HorseGuardsRoad,heatingisprovidedfromtheCombinedHeatandPowerPlant(CHP)oftheWhitehallDistrictHeatingsystemandtheexcesselectricitygeneratedfromburninggasissoldtotheNationalGrid.Travelemissionsarefromair,trainandcarjourneys.

3.3 TheTreasurygroupforcarbonbudgetpurposescomprisesHMTreasury(includingOGC,anofficeofHMTreasury),BuyingSolutions(anexecutiveagencyofOGC),theDebtManagementOffice(DMO,anexecutiveagencyofHMTreasury)andtheveryrecentlyformedAssetProtectionAgency(APA,anexecutiveagencyofHMTreasury).

3.4 TheTreasury’sdepartmentalcarbonbudgetsfortheperiod2008-22aresetoutinTable3.A.ThesearealignedwithexistingtargetsundertheSustainableOperationsontheGovernmentEstate(SOGE)framework:

• reduceemissionsfromofficesby30percentby2020from1999-2000levels;and

• reduceemissionsfromroadvehiclesusedforadministrativeoperationsby30percentby2020,relativeto2005-06levels.

Table 3.A: The Treasury’s carbon budget for budget periods 1, 2 and 3

2008-12 2013-17 2018-22

Buildings 32,961 29,784 26,355

Travel 1,116 1,001 905

Total 34,077 30,785 27,260

3.5 AsthedetailsofthenewSOGEframeworkarebuiltintothecarbonbudgetallocationfromcarbonbudgetperiod2(2013)onwards,theTreasurywillensurethatitmonitors,reports,andmeetsthebroaderandmorechallengingtargets.Thesereductionsinpublicsectorcarbonemissionswillalsodeliverfinancialsavings,contributingtotheGovernment’saimofreleasing£300millioninenergybillsavingsby2012-13throughgreaterenergyefficiency.

3.6 Theplanwillbereviewedandupdatedinthenext18monthsinordertopresentthedepartment’snewshareofthepublicsectorcarbonbudget,andtherevisedsetofmeasuresbeingplannedtosecurebothcarbonandfinancialsavings.

The Treasury’s progress on reducing emissions

3.7 Datafrom2008-09indicatethattheTreasuryhasreduceditscarbonemissionsperannumfromofficesby29.2percentbelow1999-20001levels,againstthe2010-11targetof12.5percent.

3.8 TheexpecteddeliverytrajectoryagainsttheSOGEtargetsissummarisedbelow:

1BaselinesetfortheSustainableOperationsontheGovernmentEstate(SOGE)framework.


3.9 Basedonyear-on-yearfallsinemissionsto2007-08andanassessmentofhavingsoundcarbonmanagementsystems,theTreasurygroupwasawardedtheCarbonTrustStandardforallofitsUKoperations.ThisincludesemissionsfromtheestateandalltransportusedbyofficialsandMinisters.Independentlyassessed,theCarbonTrustStandardprovidesarobust,objectiveandconsistentmethodologyforassessingorganisationcarbonperformance.ItcertifiesthattheTreasuryismeasuring,managingandreducingitscarbonfootprintandhasmaderealemissionsreductionsyear-on-year.

Reducing emissions from our estate

3.10 AsummaryoftheofficeestateissetoutinTable3.Abelow:

Location Total net internal area (NIA) M2

Tenure Managed

1 Horse Guards Road, London

22943 Freehold Under a PFI contract

Rosebery Court, Norwich

6373 Leasehold Under a facilities management contract

Alexandra House, Leeds

582 Leasehold By the Landlord

Eastcheap Court, City of London


Royal Liver Building, Liverpool


3.11 Thetotalareasaboveinclude,whereapplicable,areasoccupiedbyotherpublicsectortenants,thefacilitiesmanagementprovider,andvacantspace.However,generallyenvironmentaldatarelatesonlytothoseareassolelyoccupiedorcontrolledbytheHMTreasurygroup.

3.12 Inthecaseoftheleaseholdproperties,thegroupworks(withothertenantswhereappropriate)toinfluencelandlords.Inthepastsomedatahasnotbeenreadilyavailablebutthispictureisgraduallyimprovingaslandlordscometounderstandtherelevanceandimportanceofenvironmentalperformancetogovernmentdepartments.

3.13 AdetailedreportbytheCarbonTrustin2007setoutanumberofrecommendationsforcarbonemissionreductionsat1HorseGuardsRoad,whichhaveallbeensuccessfullyimplemented,including:

Emissions from offices

Baseline (tonnes CO2)

2010-11 target (tonnes CO2)

2007-08 reported % change

7,932.00 6,940.50 -28.2%

2008-09 reported (tonnes CO2)


2010-11 forecast % change

5,617.71 -29.2% -28.1%

Emissions from road vehicles

Baseline (tonnes CO2)

2010-11 target (tonnes CO2)


258.60 219.81 -41.7%

2008-09 reported (tonnes CO2)


2010-11 forecast % change

120.98 -53.2% -54.8%


• improvedheating,hotwaterandairhandlingcontrols;

• optimisingplanttimecontrolsettings;and

• reducinghighnightandweekendbaseelectricalload.

3.14 Itisanticipatedthatthemeasuresputinplaceoverthelastfewyearswillproducesignificantreductionsinfutureyears.AreviewoftheremainingCarbonTrustrecommendationsiscurrentlyinhandand,subjecttoresourcesandvalueformoneyconsiderations,implementationmaytakeplacein2010-11.

3.15 Additionally,toenhancemonitoringanddataqualityforutilitiesandtoimprovereactiontimesat1HorseGuardsRoad,automatedmeterreadershavebeeninstalledand,fundedbyDECC’sLowCarbonTechnologyProgramme,thesewillbelinkedintotheBuildingManagementSystemandsub-meterswillbeinstalled.Enhancementworktotheairconditioningplantisalsocontinuingtofurtherimproveitsperformance.

3.16 ArangeofcarbonreductioninitiativeshavealsobeenimplementedatRoseberyCourt,Norwich,includinginstallationofautomatedmeterreaders,airrecirculation,splitairconditioningunitsinserverroomsandtestrooms,andmoreproactivebuildingmanagementbyourFMprovider.Additionally,sub-metersaretobeinstalledundertheDECCprogrammementionedabove,TimeZonecontrolsarebeingputonheatingfancoilstoenableseparatetemperatureadjustmentsindifferentareasandsensor-activatedtapsarebeingconsideredasawatersavingmeasure.

3.17 BuyingSolutions,whosemainofficeisintheRoyalLiverBuilding,Liverpool,isplanningoverthenextyeartoimplementitsownEnvironmentalManagementSystemtoISO14001.

Greening the Treasury IT

3.18 TheTreasuryhasamajorITimprovementprogramme,FastForward,whichwillmakearange

ofITchangesusingtheCabinetOfficeFLEXsharedservice,thatwillimprovethesustainabilityofITsystems.Through2010theprogrammewillmigrateIToperationstotheFLEXcommercialdatacentre,sharedwithothergovernmentorganisations.Themigrationactivityincludesreducingthenumberofphysicalserversbyusingmoreresilientandefficient‘virtual’servers.Furtherimprovementsareanticipatedthrough:

• sharedprintingandprinterconsolidationtoreducethetotalnumberofprintingdevices;

• pull-printing,givingtheopportunitytoreducepaperconsumptionasfinalcopiesareactivatedfromanyprinterasrequired,therebyreducingmistakenorforgottenprinting;

• deploymentsof‘thinclienttechnology’aspartofthe‘confidential’Flexnetwork,whichdrawsignificantlylesspowerthantheaveragedesktop;and

• theuseoflaptops,ensuringPCsarestoreddisconnectedfromthemainswhennotinuseandenablingpeopletoworkwithlaptopsatmeetingsandothereventsinalternativelocationsratherthanprintingpapers.

3.19 TheDMOcompletedasimilardata-centre/virtualisationmovein2009,forasmallerserverestate.ContinualimprovementatDMOincludesmovingtovirtualPCtechnologyandupgradingthetelephoneswitchservicestocomplementtheoveralllowerenergyconsumption/outputstrategy.

Future trends

3.20 Inplanningcarbonreductionmeasuresoverthelastonetotwoyears,itwasassumedthattheTreasuryestatewouldoperateundernormalusageconditions.However,theincreasedworkloadoftheTreasuryarisingfromthefinancialcrisisandglobaleconomicdownturnresultedinsignificantlyincreasedoccupancyanddemandsonitsbuildingsandservices,particularlyat1HorseGuardsRoad.Thisledtoasmallincreaseinenergyconsumptionandemissionsinthefinalquartersof2008-09.


3.21 Despitetheseexceptionalcircumstances,estaterationalisationandtheimplementationoftheCarbonTrustrecommendationshasensuredthatemissionshavefallenoverall.TheTreasurywillcontinuetomonitortheeffectsofincreasedusageof1HorseGuardsRoad,butremainsconfidentofmaintainingasteadyimprovementincarbonreductionperformanceastheimplementationoftheCarbonTrustreportrecommendationstakesfulleffect.TheTreasurywillalsobeparticipatingintheCarbonTrust’snewcollaborativecarbonmanagementprogramme,whichwillassistintheidentificationoffurtheropportunities(e.g.furtherworkspaceefficiency)andimprovingorganisationallearning.

Sustainable procurement in the Treasury

3.22 TheSustainableProcurementActionPlan(SPAP)willbeupdatedtobuildonpreviouscommitments,detailingthewaysthesupplychaincancontributetoachievingthedepartment’ssustainabilitytargets,andwillbeimplementedbyGroupProcurementoverthecourseof2010.Themeasuresinclude:

• usingtheSustainableProcurementTaskForceFlexibleFrameworkasameasureof“wherearewenow?”and“wherewouldweliketogetto?”withrespecttooursustainableprocurementbehaviours;

• uettinganddetailingtheobjectivesandprioritiesforthemediumandlongterm;

• measuringprogressagainsttheSPAPandagainstthemilestonesintheSustainableProcurementNationalActionPlan;and

• workinginpartnershipwithoursuppliersandtheirnetworkstoidentifyandimplementmeasuresthatwillcontributetoachievingtheseobjectivesandpriorities.


4 Adapting to climate change

Challenges4.1 Inordertotakeeffectiveactiononclimatechange,itisnecessarytohaveanunderstandingofthecostsoftheimpactsthechangingclimatewillbringaswellashowbesttomitigatetheimpactsincludingadaptationtothechangesthatareinevitableoverthecomingdecades.In2005,theTreasurycommissionedLordSterntoleadamajorindependentreviewoftheeconomicsofclimatechange,whichreportedin2006.Amongstotherthings,theSternReview1madeitclearthatadaptationwillberequiredtoreducethecostsanddisruptioncausedbyclimatechange,particularlyfromextremeweathereventssuchasstorms,floodsandheatwaves.

4.2 TheGovernment’sresponsetotheSternReviewhasbeencomprehensive,withthepoliciesandmechanismsalreadyinplacecomplementedbynewpoliciesandactionsacrossarangeofsectors.DetailedanalysisbuildingontheSternReviewhasbeen,andcontinuestobe,producedbytheGovernmenttosupportthedevelopmentandimplementationofnewpolicies.

4.3 AssetoutinChapter1,theClimateChangeAct2008providedtheGovernment’sclimatechangepolicieswithalegalframework.Toaddressclimatechangeimpacts,theActestablishedaSub-CommitteeonAdaptationandrequires,amongstotherthings,thataUKwideclimatechangeriskassessmentmusttakeplaceeveryfiveyearsandanationaladaptationprogrammebeestablishedandreviewedeveryfiveyears.

1SternReview:TheEconomicsofClimateChange,HMTreasury(2006).

The impacts of climate change in the UK

4.4 TheclimateoftheUKissettochangesignificantlythiscentury.UK Climate Projections2publishedbyDefrain2009projectthatallareasoftheUKwillgetwarmer,moresoinsummerthaninwinter(Figure4.A,4.B).Therewillbelittlechangeintheamountofprecipitationthatfallsannually,butitislikelythatmoreofitwillfallinthewinter,withdriersummers,formuchoftheUK.Sealevelswillrise,andtoagreaterdegreeinthesouthoftheUKthanthenorth.Therewillbeincreasedincidencesofextremeeventsdrivenbyincreasedenergyintheatmosphereandalteredweatherpatterns.

4.5 TheUKwillneedtoadaptinordertoreducethecostsanddisruptioncausedbyclimatechange.Earlyactiontomanagetheriskscouldgreatlyreduceassociatedcoststotheeconomy.TheAssociationofBritishInsurersestimatesthatatleast80percentoftheadditionalcostsofclimatechangecouldbeavoidedbytakingactionnowtomanagetheUKexposuretoextremeeventsthroughweather-proofingbuildings,floodprotection,andcontrolsondevelopmentinfloodplains.

2Climatechangeprojections,version2,UKCIP,Defra(2009).


4.6 TheGovernmentisworkingtoensurethataframeworkforadaptationexiststoprovideinformationandguidanceforpeopleandbusinesses,thatplanningandbuildingregulationsareappropriatetodealwithexpectedclimateimpactsandthatpublicandprivateinvestmentdecisions,particularlylong-terminvestments,reflectfutureclimaterisks.

4.7 AUKClimateChangeRiskAssessment(UKCCRA)isbeingpreparedfor2010-11andanationaladaptationprogrammewillbepublishedby2012,followingadvicefromtheCommitteeonClimateChange.TheUKCCRAandaccompanyingeconomicanalysiswillinformdetailedconsiderationofclimatechangerisksandpolicydevelopment.

4.8 Therearelikelytobemacroeconomicimpactsfromtakingactiontoadapttoclimatechange.Forexample,UKinflationmaybeaffectedbyfluctuationsinglobalcommoditypricesandthecostsofinvestmentbycompaniesintheiroperationsandinfrastructurewillputaddedpressureonconsumerprices.

4.9 Ontheotherhand,sectorspecificeffectswillbringbothopportunitiesandriskstotheUKeconomy.CompetitivenessofUKindustrymaybeaffected–dependingontheresponsetoadaptationandspecificchangestolocalclimate,theUKeconomymaybebetterabletoadaptthansomeandretainorbuildonitscompetitiveness;alternatively,theUKcouldfinditmoredifficultto

Figure 4.A: (Left) Central estimates of the average regional summer (June, July, August) temperature rise in the 2080s are between 3 and 4°C. Also shown are central estimates of average summer temperature increase through time, for a medium emissions scenario, for the South East of England in the 2020s, 2040s and 2080s.2

Figure 4.B: (Right) Central estimates of regional average winter precipitation change are projected to be in the region of +14% (NE) to +23% (SW), in the 2080s. Also shown are central estimates of average winter rainfall through time, for a medium emissions scenario for the North West of England for the 2020s, 2040s and 2080s.2

Chapter 3 – What are the key findings?

South East of England:

Central estimates of average summer temperature increase through time, for a medium emissions scenario, for the South East of England in the 2020s, 2040s and 2080s.

Projections of central estimates of average summer temperature change in the South East get larger over time. Projected increases in average summer temperatures are 1.6°C (0.6-2.7°C) during the 2020s, 2.3C (1.0-4.0°C) by the 2040s and 3.9°C (2.0-6.4°C) by the 2080s.

The temperature increases provided in the diagram are central estimates of the summer average change for 30 year time periods centred on the decade shown.

11 | Adapting to climate change

Summer temperature: all areas of the UK will get warmer, more so in summer than in winter.

Across the UK, central estimates of the average regional summer (June, July, August) temperature rise in the 2080s are between 3 and 4°C.

Central estimates of temperature change in °C from the 1961-1990 baseline for 25km grid squares, (2080s, for the medium emissions scenario).

What are the key findings? – Chapter 3

Summer precipitation: summer precipitation tends to decrease across the UK.

2020s

+1.60C

2040s

+2.30C

2080s

+3.90C

South West of England:

Central estimate of summer rainfall through time, for a medium emission scenario, for the South West of England in the 2020s, 2040s and 2080s.

Across the UK, central estimates of regional average summer precipitation change in the 2080s are -17% to -23%.

Projections of central estimates of average summer precipitation change in the South West get larger over time. Projected changes in average summer precipitation are -7% (-26 to +14%) during the 2020s, -13% (-35% to +11%) by the 2040s and -23% (-49% to +6%) by the 2080s.

The diagram shows central estimates of summer precipitation change at the 25km spatial resolution for the 2080s.

DEF-PB13274-ClimRep09.indd 18 17/6/09 13:43:21



Winter precipitation: winter precipitation tends to increase across the UK.

Across the UK, central estimates of regional average winter precipitation change are projected to be in the region of +14% (NE) to +23% (SW), in the 2080s.

Central estimate of % change in winter precipitation from the 1961-90 baseline across 25km squares (2080s, for the medium emissions scenario).

We have also modelled a worst case that give rises of up to 1.9 metres by 2100 (high++ scenario). The high++ is for 2095 for the UK, and is a highly unlikely, extreme scenario for the purposes of contingency planning, for example future Thames Barrier requirements. It should be noted that recent observations and model projections do not suggest this extreme scenario will occur.

The projected future trends in storm surge are less than 9cm above current average storm surge levels, by 2100, not including sea level rise, everywhere around the UK, and in many places this is within what might be expected through existing natural variation. More information on storm surge can be found on the website (http://ukclimateprojections.defra.gov.uk).

Comparisons of UKCP09 with UKCIP02

The results of this new set of Projections are broadly consistent with the previous set, UKCIP02. But there is a lot more information in UKCP09 and wider ranges in the new set of Projections. The reasons for the differences between the two sets of projections lie in the different model results and methodologies which were used to derive them. UKCP09 includes:

• the effects of land and ocean carbon cycle feedbacks;• uncertainty due to natural variability;• modelling uncertainty: UKCIP02 was derived using a variant of one (Met Office) model, whereas UKCP09

is derived from ensembles of variants of Met Office models together with information from other international climate models; and

• uncertainties associated with the statistical processing required to convert results from model ensembles into probabilistic projections, none of which were able to be included in UKCIP02 projections.

A more detailed analysis of the comparison between UKCIP02 and UKCP09 is available in the UK Climate Projections Science Report: Climate Change Projections available through the website. (http://ukclimateprojections.defra.gov.uk)

The effect of different emissions scenarios

Inertia of the climate system means that global temperature changes lag behind the emission of greenhouse gases. We are already committed to another 0.6°C rise in average global temperatures and will have to adapt to this unavoidable warming. It also means that actions to cut emissions started now will not slow the rise of global temperature until at least 2040.

Emissions over the next few decades, which will affect the degree of climate change in the latter half of the century, will be largely determined by what we do internationally. This will have a huge impact on what level of climate change future generations will have to live with. By urgently and rapidly reducing emissions, by for example reaching a peak in global emissions in 2016 and achieving a 4% decrease per


2020s

+6%

+10%

+16%

2040s

2080s

North West of England:

Central estimates of average winter rainfall through time, for a medium emissions scenario for the North West of England for the 2020s, 2040s and 2080s.

Sea level rise and storm surge:

Central estimates of sea level rise in London through time, for a medium emissions scenario in the 2040s and 2080s.

Projections of mean winter precipitation change in the North West get larger over time with projected increases in average winter precipitation of +6% (-1% to +14%) during the 2020s, +10% (+1% to +21%) by the 2040s and +16% (+3% to +35%) by the 2080s.

The precipitation changes provided in the diagram are central estimates of winter averages for 30 year time periods centred on the decade shown.

The central estimates for sea level rise (taking into account land movement) show that sea level is projected to rise by 18cm in London by 2040 and 36cm by 2080.

Sea level rise is calculated in a different way to the probabilistic projections; the results shown are for individual years and the central estimate represents the point at which half of the models used simulate a greater increase and half simulate a smaller increase.



South East of England:

Central estimates of average summer temperature increase through time, for a medium emissions scenario, for the South East of England in the 2020s, 2040s and 2080s.

Projections of central estimates of average summer temperature change in the South East get larger over time. Projected increases in average summer temperatures are 1.6°C (0.6-2.7°C) during the 2020s, 2.3C (1.0-4.0°C) by the 2040s and 3.9°C (2.0-6.4°C) by the 2080s.

The temperature increases provided in the diagram are central estimates of the summer average change for 30 year time periods centred on the decade shown.


Summer temperature: all areas of the UK will get warmer, more so in summer than in winter.

Across the UK, central estimates of the average regional summer (June, July, August) temperature rise in the 2080s are between 3 and 4°C.

Central estimates of temperature change in °C from the 1961-1990 baseline for 25km grid squares, (2080s, for the medium emissions scenario).


Summer precipitation: summer precipitation tends to decrease across the UK.

2020s

+1.60C

2040s

+2.30C

2080s

+3.90C

South West of England:

Central estimate of summer rainfall through time, for a medium emission scenario, for the South West of England in the 2020s, 2040s and 2080s.

Across the UK, central estimates of regional average summer precipitation change in the 2080s are -17% to -23%.

Projections of central estimates of average summer precipitation change in the South West get larger over time. Projected changes in average summer precipitation are -7% (-26 to +14%) during the 2020s, -13% (-35% to +11%) by the 2040s and -23% (-49% to +6%) by the 2080s.

The diagram shows central estimates of summer precipitation change at the 25km spatial resolution for the 2080s.




Winter precipitation: winter precipitation tends to increase across the UK.

Across the UK, central estimates of regional average winter precipitation change are projected to be in the region of +14% (NE) to +23% (SW), in the 2080s.

Central estimate of % change in winter precipitation from the 1961-90 baseline across 25km squares (2080s, for the medium emissions scenario).

We have also modelled a worst case that give rises of up to 1.9 metres by 2100 (high++ scenario). The high++ is for 2095 for the UK, and is a highly unlikely, extreme scenario for the purposes of contingency planning, for example future Thames Barrier requirements. It should be noted that recent observations and model projections do not suggest this extreme scenario will occur.

The projected future trends in storm surge are less than 9cm above current average storm surge levels, by 2100, not including sea level rise, everywhere around the UK, and in many places this is within what might be expected through existing natural variation. More information on storm surge can be found on the website (http://ukclimateprojections.defra.gov.uk).

Comparisons of UKCP09 with UKCIP02

The results of this new set of Projections are broadly consistent with the previous set, UKCIP02. But there is a lot more information in UKCP09 and wider ranges in the new set of Projections. The reasons for the differences between the two sets of projections lie in the different model results and methodologies which were used to derive them. UKCP09 includes:

• the effects of land and ocean carbon cycle feedbacks;• uncertainty due to natural variability;• modelling uncertainty: UKCIP02 was derived using a variant of one (Met Office) model, whereas UKCP09

is derived from ensembles of variants of Met Office models together with information from other international climate models; and

• uncertainties associated with the statistical processing required to convert results from model ensembles into probabilistic projections, none of which were able to be included in UKCIP02 projections.

A more detailed analysis of the comparison between UKCIP02 and UKCP09 is available in the UK Climate Projections Science Report: Climate Change Projections available through the website. (http://ukclimateprojections.defra.gov.uk)

The effect of different emissions scenarios

Inertia of the climate system means that global temperature changes lag behind the emission of greenhouse gases. We are already committed to another 0.6°C rise in average global temperatures and will have to adapt to this unavoidable warming. It also means that actions to cut emissions started now will not slow the rise of global temperature until at least 2040.

Emissions over the next few decades, which will affect the degree of climate change in the latter half of the century, will be largely determined by what we do internationally. This will have a huge impact on what level of climate change future generations will have to live with. By urgently and rapidly reducing emissions, by for example reaching a peak in global emissions in 2016 and achieving a 4% decrease per


2020s

+6%

+10%

+16%

2040s

2080s

North West of England:

Central estimates of average winter rainfall through time, for a medium emissions scenario for the North West of England for the 2020s, 2040s and 2080s.

Sea level rise and storm surge:

Central estimates of sea level rise in London through time, for a medium emissions scenario in the 2040s and 2080s.

Projections of mean winter precipitation change in the North West get larger over time with projected increases in average winter precipitation of +6% (-1% to +14%) during the 2020s, +10% (+1% to +21%) by the 2040s and +16% (+3% to +35%) by the 2080s.

The precipitation changes provided in the diagram are central estimates of winter averages for 30 year time periods centred on the decade shown.

The central estimates for sea level rise (taking into account land movement) show that sea level is projected to rise by 18cm in London by 2040 and 36cm by 2080.

Sea level rise is calculated in a different way to the probabilistic projections; the results shown are for individual years and the central estimate represents the point at which half of the models used simulate a greater increase and half simulate a smaller increase.



adaptthansomeeconomiesplacingusatarelativedisadvantage.

4.10 Inagriculture,adaptationwillbringchangestofarmingpractices;thismayincludechangesinthetypesofcropsgrownandanimalskept,aswellasimpactsontheseasonalyieldsofbothoverthemediumtolongterm.UKtourismmaybenefitfromprojectedincreasesinaveragetemperaturesandlowerrainfallinsummer.

4.11 InsurancecanplayaprominentroleinhelpingtheUKeconomyadapt,coveringrisksofcropfailures,floodsandheatwavesforexample.However,aslongasclimateimpactsareuncertain,insurancecompaniesmaymispriceforcoverageorrefusetoacceptrisk.Budgetconstraints,inertiaandculturalfactorsmayinhibitpeoplefromadaptingintheshorttermandinsurancecoverisnotuniversal.Achallengeforfuturedevelopmentistoensurethattheregulatoryframeworkremainssufficientlyflexibletoencourageinsurancemarketstodevelopinnovativeproductsthatencouragethoseatrisktoadaptastheclimatechanges.Thisneedstobebalancedwiththeneedtoensuretheresilienceofthesector.

4.12 Muchoftheinvestmentmadeinadaptingtoclimatechangewillbemadebytheprivatesector.Nevertheless,theGovernmentplaysacrucial,butdiverseroleintheareaofresilienceofpublicinfrastructureandutilitiesthroughfunding,regulatingandinsomecasesdirectlyprovidingservices.Somespendingdecisionshavealreadybeenmadeasaresultofexposuretothecurrentclimate,e.g.intheprovisionofadditionalresourcesfordefencesagainstfloodandcoastalerosion.

4.13 Floodingorheatwavescouldhaveimmediatecostsforthepublicsectorasitmanagesthesituationandprovidesassistancetothoseputatriskordirectlyaffected.Thefloodsof2007costthepublicsectorover£200mandinfutureitwillbeimportanttomakesureadequateresourcesareavailabletoensureaswift,cost-effectiveresponsetosuchextremeevents.Inadditiontotheneedforimmediate

recoveryresponse,supportmaybeneededtohelprepairinfrastructureandotherdamage,tofinancereliefpaymentsandtoincreasespendingonsocialpaymentsarisingfromeconomicdisruption.

4.14 Heatwavesarelikelytoleadtowideroccurrenceofproblemssuchasheatexhaustion,whilemorefrequentdroughtsmaycausemorewatershortages(particularlyintheSouthEast),possiblyincreasingthedemandforservicesforvulnerablegroupssuchastheelderlyanddisabled.Somevulnerablesectorsofsocietymayrequireadditionalassistancetoadapttheirhomes,beingunabletotakestepsortoaffordtosothemselves.

Economics of adaptation and the evidence base

4.15 Inordertoadapttothechangingclimate,itisnecessarytoreducevulnerabilitytoclimatechangeandvariability,therebyreducingnegativeimpacts,and,toenhancethecapabilitytocaptureanybenefits.1Adaptationincursupfrontcostsbutitalsoreducesthedamagefromclimatechange.Evenaftertakingactionstoadapt,therewillalmostcertainlyberesidualdamage,whichcouldbeconsiderable.Thegrossbenefitofadaptationisthedamageavoided.Thenetbenefitisthedamageavoided,lessthecostofadaptation(Figure4.C).Theideal(efficient)adaptationstrategyistominimisethecombinedtotalofresidualdamagesandthecosts.Actingtomitigatecosts,adaptationcanalsoofferopportunitiestoadjusteconomicactivityinvulnerablesectorsorevenhavepotentialforneworexpandedactivitiesinotherareas.

4.16 Adaptationoperatesintwomainways.3Onafirstlevel,adaptivecapacityisbuiltbycreatingtheinformationandconditionsthatareneededtosupportadaptation.Thisincludesunderstandingthepotentialimpacts,identifyingvulnerabilities,testingresponsesandbuildingresourcesneededtoimplementmeasures.Thenextstageistotakestepstoreducevulnerabilitytoclimateriskssuchas

3MeasuringProgress,UKCIP,Defra(2005).


investmentinphysicalinfrastructureortoexploitanyopportunitieswherethebenefitsoutweighthecosts,suchasthepotentialtogrownewcrops.

4.17 Manyofthecostsofadaptationwillbebornedirectlybytheprivatesectorasindividualsandfirmsrespondautonomously–i.e.withoutexternalintervention–tochangesasaresultofthechangesintheirphysicalenvironmentormarketandothercircumstances.Otheradaptiveresponseswillneedtobetakenforwardthroughcarefulplanningforthelongterm,e.g.majorinfrastructuresuchasflooddefences.Climatevariability,andespeciallyextremeevents,willprovideimportantsignals,togetherwiththedisseminationofknowledgeandinformation.Adaptivecapabilityisrelatedtoincomeandcapabilities.Many,especiallysmaller,decisionswillinvolveameasureofhabitmadeonshorttime-scaleswithsmallamountsofresources,whichmaylimittheextenttowhichadaptiveactiontendstowardsmaximumsocio-economicnetbenefits.Theextenttowhichsocietycanrelyonautonomousadaptationtoreducethecostsofclimatechangedefinestheneedforfurtherpolicy.1

The residual cost of climate damage plus the cost of adaptation is the cost of climate change, after adaptation.

Cost

s of

clim

ate

chan

ge

Cost of climate change without adaptation

Cost of adaptation + residual climate change damage

Residual climate change damage

Gross benefit of adaptation

Net benefit of adaptation

Total cost of climate change, after adaptation

Global mean temperature

Figure 4.C: Adaptation and the costs of climate change.1

4.18 Somedecisionswillbemadeinformalisedcontexts,suchasbusinessinvestmentorlocalgovernmentplanning.4Authoritiesandbusinesseswillwanttoapplytraditionaldecisionsupporttools,suchascost/benefitanalysis,cost-effectivenessanalysisandmulti-criteriaanalysis.However,thereareanumberofanalyticalandpolicychallengesassociatedwithestimatingadaptationcostsandbenefits.First,adaptationactionsareoftenembeddedwithinresponsestoawiderangeofcriteria,whichinmanycasesaremoreinfluential;itmaynotbefeasibletofindanefficientadaptationactionwhenotherfactorsdominate.Adaptationcostscanincreaseconsiderablydependingonthedegreeoffuture-proofingaddedtothedirectresponsetoclimatechange.Uncertaintyinclimatechangeprojectionsandthetimingofactionswillinfluenceadaptationcostsandbenefits.Theremightalsobedifferencesbetweenlocalandeconomy-wideconsequencesofmeasures.

4SAgrawalaandSFankhauser,editors,EconomicAspectsofAdaptationtoClimateChange–Costs,BenefitsandPolicyInstruments,OECD(2008).


4.19 Decisionsaboutspecificinvestmentsinactionswhereclimaterisksneedtobeconsideredrequireaknowledgeoftherelevantcostsandbenefitsoftakingadaptationintoaccount.IntheUK,thereisinformationonclimatechangerisksandimpactsspanningallsectors.56Nearlyallofthisworkusesconsistentclimateprojections,andusuallyconsistentsocio-economicscenarios,fromtheUKClimateImpactsProgramme(UKCIP).However,whilequantitativeassessmentshavebeenundertakenformanysectorsintheUK,includinghealth,flooding,waterresources,energy,agricultureandsomeaspectsofbiodiversity,quantificationisstillincompleteandcoversasub-setofclimateparametersandrisk/impactendpoints.Somesectors,suchastransport,businessandmarine,arenotaswellstudiedandmanyareasremainchallenging,e.g.fullimpactsonbiodiversityandecosystemservices.Inmanycases,onlyqualitativeinformationisavailableforpotentialrisksandimpacts.

4.20 Thereareotherdataissues.Veryfewstudieshaveconsideredthevaluationofimpacts.Quantitativedataoncross-sectoral,distributionalandindirecteffectsofclimatechangeatthenationallevelarepoor.Therearealmostnostudiesofthewidereconomiceffects(multi-stageimpactsthroughtheeconomy,aggregatedmacroeconomiceffectsandhowinternationaleconomicimpactswillaffecttheUK).

4.21 Itisclearthatadaptationactionsinsomesectorscanbeimplementedatlowcost,forexampleagriculturalpracticesandbehaviouraladjustmentssuchasincreasedwateruseefficiency.4Otheradaptationsinvolveinfrastructuremeasuressuchaswaterstorageandflooddefenceswherecostsarehigh.However,comparedwithclimaterisksandimpacts,informationonthecostsofadaptationactionsismuchmorelimitedandunevenly

5MetroeconomicaLimited,ClimateChangeImpactsandAdaptation:CrossRegionalResearchProgramme-QuantifytheCostsofImpactsandAdaptation,Defra(2006).6MetroeconomicaLimited,LiteratureReview–ScopingStudyforaNationalClimateChangeRiskAssessmentandCost-BenefitAnalysis,Defra(2009).

distributedacrosssectors,restrictingtheapplicabilityofcost-benefitanalysis.

4.22 Foranalysisrelyingoncost-effectivenessmeasuresratherthancost-benefitratios,therearealsodifficultiesastherearenoacceptedmetricsforassessingtheeffectivenessofadaptationmeasures,asopposedtomitigationwherereductionsingreenhouseemissionlevelscanbeused.

4.23 Inordertoaddresssomeoftheevidenceandanalysisgaps,aUKAdaptationEconomicAnalysis(AEA)isbeingcarriedout,andwillfollowpublicationoftheUKCCRAin2010-11.TheAEAwillinvestigatearangeofmethodsincludingcost-benefitsanalysis(whichfocusesmoreonshort-termmeasures)aswellascost-effectivenessanalysis,multi-criteriaanalysisandscenario-basedapproachesamongstotherswithvariousstrengthsandweaknesses.6


5 Adaptation and the Treasury

Introduction5.1 ThischapterconsidershowclimatechangewillaffecttheTreasuryGroup’sownpoliciesandresponsibilities,processesandestates,itsstrategyforrespondingtotherisksidentified,andhowitishelpingtheUKtoadapt.ItalsodescribeswhattheTreasuryisdoingtoensurethatithasthecapabilitytoaddresstheseissues.

5.2 InitsroleasanindependentofficeoftheTreasury,theOfficeofGovernmentCommerce(OGC)istaskedwithdeliveringtransformationofgovernmentprocurement,andwithdrivingupstandardsandprocurementcapabilityacrosscentralgovernment,includingtheaimofmakingtheseprocessessustainable,takingintoaccounttheneedtoadapttoclimatechange.

5.3 AssetoutinChapter1,theTreasuryhastwoDepartmentalStrategicObjectives(DSOs)thatsetoutitspolicyobjectives:

• tomaintainsoundpublicfinances;and

• toensuresustainableeconomicgrowth,wellbeingandprosperityforall.

5.4 TheseDSOsgoverntheTreasuryGroup’srolesandresponsibilitiesinrelationtoadaptationasdiscussedbelow.PrioritiesidentifiedforactiononadaptationwithintheGrouparelistedattheendofthischapter.

Implications for economic growth

5.5 TheTreasuryistaskedwithensuringhighandsustainablelevelsofeconomicgrowth,well-beingandprosperityforall.Itdoesthisbysupportinglowinflation,promotingtheefficiencyandfairnessofitsfiscalsystemandstableglobalfinancialmarkets

whilepursuingincreasedproductivityandefficiency.Aspartofthisremit,theTreasuryiscommittedtoprotectingtheenvironmentinaneconomicallyefficientandsustainableway.

5.6 RespondingeffectivelytothechallengespresentedbyclimatechangerequirestheGovernmenttoensurethatmarketframeworksaresettoencourageinvestment.TheTreasury’sroleinmaintainingastablemacroeconomyiskeytoenablingwell-informeddecisionsoninvestmentininfrastructure.

5.7 Thecoststotheeconomyrelatedtoadaptationactivityare:

a. Direct costsforconsumersandbusinessofmaintainingsufficientlevelsoflong-termadaptationacrossbusinessandsociety(stimulatedthrougharangeofpolicyinstruments);

b. Opportunities and costs for specific sectors,includingfor:

• thefinancialservicessectoringeneralinmanagingthefloodandotherriskstotheCityofLondon,andtheopportunitiesthatmightarisefrominvestmentinadaptationprogrammesintheUKandoverseas;and

• theinsuranceindustryinmanagingincreasedrisksanddevelopingnewinsuranceproductsrelatingtomorefrequentandextremeclimateevents.

c. Subsequent knock-on effectsontheeconomyduetotheimpactoftheprimarycostsofadaptationonmacroeconomicfactorssuchasGDP,inflation;


5.8 ThekeyrisksinrelationtoachievingtheTreasury’seconomicobjectivearethat:

a. theremaybeinsufficientevidenceontheeconomicimpactsofadaptingornotadaptingtoclimatechangeandtheeconomicbenefitsofadaptationintheUKinordertoinformpolicydevelopment;and

b. theeconomyandsocietyareunabletoadaptcost-effectivelytothechangeinclimateanddonotexploittheopportunities.

5.9 IncreasingtheunderstandingofthecostsandbenefitsofadaptationwillenabletheTreasurytobetterevaluatetherisksfromclimatechangetothepublicfinancesandeconomyandinformtheappropriatepolicyresponsebuttheevidencebaseisweak(§4.15).TheClimateChangeRiskAssessmentandaccompanyingAdaptationEconomicAnalysistobepublishedin2010-11willimprovetheevidencetobetterinformevaluationofclimatechangeriskstotheeconomyandthepolicyresponseneededtomanagethoserisks.Itwillhelpustounderstandwhethereconomicinstrumentswouldbebeneficialtopriceexternalities,e.g.floodrisk,waterscarcity,bearinginmindthattheGovernmentshouldonlyintervenewheretherearemarketfailures.

Financial Services sector

5.10 TheTreasuryisspecificallyresponsibleforfinancialservicespolicy,includingfinancialstability,Citycompetitiveness,wholesaleandretailmarketsandtheFinancialServicesAuthority(FSA).Financialstabilityisparticularlycrucialtomacroeconomicstabilityandisvitaltotheefficientconductofmonetarypolicy.

5.11 FinancialStabilityisasharedobjectiveoftheTreasury,theFinancialServicesAuthorityandtheBankofEngland.TheBankistheUK’scentralbankandisresponsibleformaintainingstablepricesandconfidenceinthecurrencyanddetectingandreducingthreatstothefinancialsystemasawhole.TheUK’sofficialholdingsofinternationalreservesof

goldandforeigncurrencyassetsareheldinaBoEaccountadministeredbytheTreasury.TheFSAistheindependentregulatoroftheUKfinancialservicesindustry.

5.12 TheTripartiteAuthorities(theTreasury,theFSAandtheBank)manage,deliverandparticipateinabusinesscontinuityexerciseprogrammetoprovideassuranceabouttherobustnessofbusinesscontinuityplans,totestresponsestoparticularscenariosthatresultinmajoroperationaldisruption,andprovidetrainingopportunities,forboththeAuthoritiesthemselvesandthewiderfinancialsector.The2009MarketWideExercise,involvingover80institutions,exploredtheimpactofasevereweather&floodingscenario,tounderstandbetterthelikelyeffectonthesectorwhilstalsoprovidinganopportunitytochallengenewstrategiesthathadbeendevelopedfollowingtherealsevereweathereventsinearly2009.ThescenarioincludeddisruptiontoseveralkeyinfrastructureprovidersandprovidedtheopportunitytoexaminetherelationshipbetweentheTripartiteAuthoritiesandthesectorduringsuchanevent.

5.13 The2009MarketWideExercisewasthefirsttobebasedaroundasevereweatherscenario.Therelevanceofsuchascenariohasbeenunderlinedbyrealeventsoverthelastyear,whichwhilefortunatelylessseverethanintheexercise,nonethelesshighlightedtheimportanceofrobustplanningforweather-baseddisruptionbyboththepublicandprivatesectors.Thelessonslearnedhavebeendiverseandtheresponsibilityforembeddingthemlieswiththerespectiveindividualparticipants.Nevertheless,therearesomekeycross-sectorissuesthattheTripartiteAuthoritieswillbetakingforwardthroughcloserexaminationandconsultationwithparticipants,notably:Ishome-workingaviablesolutionforanythingbeyondashort-termdisruption;arefirmsfullyawareoftheresiliencelevelsoftheircriticalsuppliersandistheroleoftheTripartiteAuthoritiesinacrisisclear,andwasitfulfilledasexpected?


5.14 TheUKinsurancemarketsarewelldevelopedfordealingwithflooding,whichisoneofthemainclimaterisks.Asclimatechangesandpastweatherrecordsbecomelessusefulindicators,theinsuranceindustrywillhavetodevelopnewwaystoassessriskwhileencouragingthoseatrisktoadapt.Atthesametime,theindustrywillhavetodevelopnewproducts.Whilesomeinsuranceproductsarebeingdevelopedtocoverclimaterisksotherthanflooding,overallthepictureisfragmentary.Forexample,thereislowpenetrationofagriculturalinsurance.Futureindustrydevelopmenttoinsureawiderrangeofclimateimpactsmayrequireco-operationbetweenindustryandtheGovernmenttoensureefficiencyandthatcoverageremainswidelyavailable.

Promoting well-being and prosperity for all

5.15 Somesectorsofsocietywillbemorevulnerabletotheimpactsofclimateeventsandrequireadditionalassistance,beingunabletotakestepsortoaffordtoadapttheirhomesorinsurethemagainstfloodingforexample,ormaybedrivenintopovertybytheincreasesinthepricesofbasiccommoditiesasaresultofinvestmentbybusinessinadaptationinfrastructureetc.

5.16 Indevelopingitsstrategiestosupportlow-incomeandothervulnerablehouseholds,includingmanypensionersanddisabled,tohelpthemplanandsaveforthefuture,theTreasury,alongwithDCSFandDWP,worktoimprovestandardsoflivingandmaterialdeprivation,whichincludeshowlow-incomehouseholdscanbesupportedtoadapttoclimatechange.TheTreasurywillcontinuetoconsiderwelfarepolicies,takingaccountofallpressuresincludingimpactsofclimatechange,aspartoftheusualprocessesforthecontrolandreviewofpublicspending.Inflationaryimpactsonbenefits,includingthosethatarisefromincreasedpricesduetorisingadaptationexpenditure,arealsoaccountedforintheusualway.

5.17 TheTreasuryisalsoworkingthroughpartnershipwiththeAssociationofBritishInsurers(ABI)andthroughtheFinancialInclusionChampions

initiativetoincreaseaccesstoaffordableinsuranceforpoorerhouseholds.Wheretherearecoverageissuesandsignificantunmetdemandinspecificareaswewillworkwithindustrytolookathowthesegapscouldbestbeaddressed.

5.18 TheTreasuryworkscloselywithotherdepartmentstoensurethatclimatefinanceisavailabletohelpthepoorestcountriesadapttothelong-termrisksassociatedwithclimatechange.Muchadaptationinthesecountriesshouldbeanextensionofgoodeconomicdevelopmentpractice,reducingvulnerabilitytoclimatechangebypromotinggrowthandthediversificationofeconomicactivity,investinginhealthandeducation,andenhancingresiliencetodisasters.InDec2009,theGovernmentannounced£1.5bnofpublicfundingtodevelopingcountriesover2010-12,andwillpayourfairshareofaglobalefforttoraise$100bnp.a.by2020,includingthroughcarbonmarketfinancialflows.

Maintaining sound public finances

5.19 Soundpublicfinancesareessentialforthemacroeconomicstabilityneededtogivebusinessesandindividualstheconfidencetoplanandinvestforthelongterm.Theyalsohelptodeliverlowlong-terminterestrates,supportingbusinesses’accesstonewfinancingandresourcesforgrowth.TheTreasurymanagespublicexpendituresothatspendingimpactsfairlywithinandbetweengenerations,usingthefiscalrulesforguidanceandensuringthatthetaxyieldissustainableandrisksaremanaged.

5.20 Thepublicfinancesmaybeimpactedinvariouswaysbytheneedtoadapt,e.g.:

a. longertermriskmanagementrequireinvestmentforconstructionandmaintenanceofcommoninfrastructure,e.g.flooddefences,roadandrailnetworks;


b. extremeclimateeventsleadtoaneedforwelfare,healthandeconomicassistancetohouseholdsandbusinessesinsomecases,andaneedtoconsiderthelong-termsustainabilityoftaxreceipts;and

c. valueformoneyconsiderationsinpublicexpenditurerequireclimatevulnerabilitytobetakenintoaccountinplanningandfinancialdecisionsmadebytheGovernment,includingprocurementprocessesanddevelopingandmaintainingitsestates.

5.21 Thekeyrisksinrelationtomaintainingsoundpublicfinancesarethat:

a. long-termcostsofadaptationtoclimatechangemightnotbemanagedwithinasustainableleveloftotalpublicspending;and

b. publicfinancesmightlackcapacityorflexibilitytorespondtoconsequencesofmorefrequentandextremeclimateevents.

Long-term adaptation

5.22 DuetothehighdegreeofuncertaintyonthetimingandthescaleofclimatechangeimpactsintheUK,andthewide-rangeofpossiblepolicyinterventions,thereisaneedtoprioritiseresourceseffectively.InterventionsbytheGovernmentneedtobefocusedonthoseareaswherefailuretoadaptwellcouldultimatelyleadtoirreversibledamageorcostlyretrofits,exposesocietytoimminentrisks,orraiseseriousequityconcerns.

5.23 TheTreasuryconsidersproposalsonmediumtolong-termexpenditureaspartoftheusualprocessesforthecontrolandreviewofspending.ThesupplementaryguidancedevelopedwithDefrafortheGreenBook(see§5.33)isavailabletohelpotherdepartmentstakeaccountofadaptation-relatedcostsandbenefitsinpolicyproposalsandtheprocurementofinfrastructure,includingthatprocuredthroughPPP/PFI.DefraandtheOGCarealsodevelopingguidancesettingoutwhyandhow

climatechangeadaptationshouldbefactoredintothepublicprocurementprocess(see§5.41).

5.24 TheTreasuryregularlyreviewsthepotentialimpactthatlong-termdevelopmentshaveonthepublicfinances,includingbothspendingandtaxreceipts.The2009Long-Term Public Finance Report: an analysis of fiscal sustainability1includesananalysisofthecostsoftacklingandadaptingtoclimatechangeonthepublicfinancesandconcludesthatwhileclimatechangepoliciesarelikelytohaveeconomicimplications,theindirectpressureonthepublicfinancesthrougheconomicgrowthislikelytobemodest.

5.25 TheTreasuryalsoencouragesdepartmentstolookattheuseofefficiencysavingsandreprioritisationwherepossible,forexampleashighlightedintheEnvironmentAgency’sLong-TermInvestmentStrategy2inthecaseofflooddefences.Nevertheless,TheTreasuryrecognisestheimportanceoffloodriskmanagementandhasprovidedsubstantialupliftsatspendingreviewstofundflooddefencesandadaptationmeasures.Publicexpenditurehasincreasedfrom£427millionin2002-03to£599millionin2005-06,andwillriseto£800millionin2010-2011.Thisfundingwillreducetheriskoffloodingandcoastalerosionforover145,000households,andmaintain39,000kilometresofflooddefencesaroundthecountry.AspartofPBR2008’sfiscalstimulus,£20millionofthisinvestmentwasbroughtforwardto2009-10,deliveringearlierprotectionfor27,000homes.

5.26 DefraandtheTreasurywillcontinuetoworkcloselytoensurethatspendingonflooddefencesstrikestherightbalancebetweenmaintenance,newconstruction,floodwarnings,developmentcontrolandmappingandprovidesvalueformoney.

1Long-termpublicfinancereport:ananalysisoffiscalsustainability,HMTreasury(2009).2InvestingfortheFuture:floodandcoastalriskmanagementinEngland–along-terminvestmentstrategy,EnvironmentAgency(2009).


5.27 Anewadvisorybody,InfrastructureUK,wasestablishedin2009asaunitwithintheTreasury.InfrastructureUKwilladvisetheGovernmentonthedevelopmentofmodern,resilientinfrastructureinareassuchasenergy,waste,water,communicationsandtransport,identifyingtheUK’slong-termneedsandconsideringournationalinfrastructureobjectives.Aspartofitswork,InfrastructureUKwilltakeintoaccounttheneedforresiliencetofuturepressures,includingclimatechange.InfrastructureUKpreparedaStrategyfornationalinfrastructuredocumentthatwaspublishedalongsideBudget2010.

5.28 Inthefuturetheremayalsobedemandsonfinancesforassistanceintheeventofextremeclimateeventsoverseasandfinancialimpactsonwelfare,healthandeducationspendingfromclimatemigrantsandrefugeescomingtotheUK.Thekeytobeingabletorespondinappropriateandtimelymannersistoensurethatthepublicfinancesareresilientandflexible.

5.29 TheEUbudgetaccountsforaround2.5percentofEUpublicspend.Itisimportantthatthebudgettakesintoaccountadaptationpolicy.WhileDefraleadsinthematterofestablishingprioritiesandpolicydetails,theTreasury,alongwiththeCabinetOffice,havearoleinhelpingdrivetheagenda,duetotheiroversightofthepolicyagendaacrossthebudget.

Extreme climate events

5.30 TheGovernmentexpectstodealwithclimaterelatedeventsandwillusetheexperienceithasgainedfrompasteventssuchasthe2007floodstoensurethatassistancecanbeprovided.

5.31 Forexample,theTreasurycontinuestoworkwithotherDepartmentstoimprovefinancialmanagement.ThiswillensureDepartmentscanreprioritiseresourcestodealwiththeimmediateimpactsofextremeeventswhilebalancingtheneedsofthewiderpublicsector.TheTreasurywillactswiftlytoprovideadditionalresourcesorrelax

budgetingconstraintswherethecostsofresponseandrecoverycannotbemetwithinexistingprovision.

5.32 Inaddition,theGovernmenthasbeenworkingwiththeABItoencouragegreateruptakeofproperty-levelfloodprotectionmeasuresandresilientrepairofpropertiesafteraflood–bothimportantadaptationsforpreparingthecountry’shousingstockfortheimpactsofincreasedfloodrisk.ArenewedStatementofPrinciplesensuresthatinsurancefromfloodriskiswidelyavailableandkeepstheriskofcompensatingthemajorityofthoseaffectedbyfloodingintheprivatesector.

Accounting for adaptation in government decision making – the Green Book

5.33 TheTreasury’sGreenBook3providesguidanceonassessmentofproposedpoliciesprogrammesandprojects,includingbothspendingandregulatoryproposalsandtheconductofappraisalinimpactassessments.SupplementaryGreenBookguidancehasalsobeenproducedondiscountingforlongtermpolicieswithpotentiallyverylargevirtuallyirreversibleadverseimpactsinover50yearstime.Inaddition,supplementaryGreenBookguidance4onhowtotakeaccountofexpectedclimatechangeanditsassociatedrisksanduncertaintieswhenappraisingproposalswaspublishedinJune2009.AllofthisguidanceisavailableontheGreenBookwebsite.2

5.34 Theaimoftheguidanceistosupportpublicbodiesintakingfullaccountoftheeffectsanduncertaintiesinclimatethatwillresultfromtheexistinghistoricallygeneratedandexpectedfuturegreenhousegasemissions.GreenBooksupplementaryguidanceonsustainabilityissueswillremainthesubjectofregularconsiderationtoensurethatitremainsalignedtodevelopingknowledgeandtheneedsofpublicpolicydetermination.TheGreenBookshouldbeusedasthebasisforallpolicydevelopmentandappraisaltoprovideobjective

3TheGreenBook–AppraisalandEvaluationinCentralGovernment,www.hm-treasury.gov.uk/data_greenbook_index.htm4AccountingfortheEffectsofClimateChange,www.defra.gov.uk/environment/climate/documents/adaptation-guidance.pdf


transparentdecisionsupportinformationandwherepossiblemakeanholisticassessmentofthewholelifecostsandbenefitstoUKsocietyofallproposals.

5.35 Afilteraccompaniestheguidanceonaccountingforclimatechangetoassistuserstoassesswhetherornotpoliciesorspendingproposalsarelikelytobeaffectedbyclimatechangeandifsodirectsthemtotheguidanceonidentificationandquantificationofclimatechangerisksanduncertainties.Theguidancethencoversgenerationofoptionstoaddressriskanduncertaintyandexplainshowtoappraisetheoptionsandthentomonitorandevaluateoutcomes.Optionsincludeincorporationofflexibilityintodesign,allowingforfutureadjustmenttocopewithvariationsintheseverityofeffects;increasingresiliencethroughdesigningprojectstotolerateawiderrangeofclimaticconditions;identifyingmeasuresthatwouldalsobebeneficialforcurrentclimate,orcostlittletoimplement;andusingsocalled“realoptionsanalysis”toquantifythebenefitsofdelayingcertaindecisionsuntilmoreinformationisavailable.

5.36 Itisplannedtoreviewdepartments’useoftheguidancein2010,bywhichtimedecision-supportmechanismssuchastheRobustDecisionMaking(RDM)frameworkmayhavebeenexplored.

Sustainable Operations on the Government Estate

5.37 TheGovernmentneedstoleadbyexampleandensureitsownestateisresilienttothecurrentandfutureimpactsofclimatechange.Coststodepartmentswillvarydependingonthesizeandnatureofdepartment’sestates,thelevelofadaptationthatmaybeneededandactionalreadyundertaken.Ensuringclimatechangeisaccountedforinthemanagementofthegovernmentestatewillhelptoavoidtheneedforcostlyretrofittingatalaterdate.Inadditiontheremaybegainsintermsofreducedvulnerabilitytocurrentclimatevariabilityaswellascontributingtothelong-termsustainabilityoftheestate.

5.38 TheOGChashelpedDefratoprepareguidancefordepartmentsonadaptingthegovernmentestatetoclimatechange.AspartofitsrevisionoftheSustainableOperationsontheGovernmentEstate(SOGE)targetframework,theGovernmenthascommittedalldepartmentstoimplement,monitorandkeepundercontinuousreviewmeasuresandchangestoadapttoclimatechangeby2015.

5.39 TheGovernmentconsidersanadaptationtargetwithinthenewSOGEFrameworktobethemostappropriatewaytomeasuredepartmentalprogressonincreasingtheresilienceoftheirestatetoclimatechangeimpactsandtodemonstrateleadershiponadaptation.ThisalsoensuresSOGEtacklesbothaspectsofclimatechange–adaptationandmitigation–consistently.TheSOGEFrameworksetstargetsandprovidesmeasuresforbothoperationsoftheestateandsustainableprocurement,providingastrategicdeliveryframeworkfortheGovernment’ssustainableprocurementandoperationsobjectivestodeliverrealimprovementsinoverallmanagementofitsestate.

5.40 Withreferencetoa2010-11baseline,eachdepartmentmustreachlevel4preparednesstotheimpactofclimatechangeby2014-15(andmaintainthislevel,withimplementationtobeassessedin2015-16and2016-17).Departmentswillbeexpectedto1)assessthespecificclimateriskstheirestatesface(e.g.byapplyingtheUKClimateProjectionsandEAfloodriskmaps)and2)assesstheirlevelofpreparednessfortheimpactsofclimatechangeandwhatmeasuresareneededtoadapttotheimpacts.ProgressandmonitoringwillbeundertakenwithintheSOGEFrameworkandyears2015-16and2016-17willallowimplementationtobeassessed.

Government procurement

5.41 Thepublicsectorhasavitalroleindemonstratinganddrivingdemandforresourceefficientsolutions.Bytakingonaleadingrole,itcancreateconfidenceamongbusinessestofollowsuit.Forexample,itcanhelpcreatesubstantialdemand


throughitsprocurementactivity,helpingtostimulatethesupplyofresourceefficientsolutionswhereitisaffordableanddemonstratesvalueformoney.

5.42 InJanuary2010,OGCpublishedaPolicythroughProcurementActionPlan5,whichsetsouttheprioritypoliciesthattheGovernmentwilldeliverthroughpublicprocurement,andmetricsformeasuringsuccess.The3prioritypoliciesareSMEs–removingbarrierstotheirparticipation,skillstraining,apprenticeshipopportunitiesandtacklingyouthunemployment,andresourceefficiencyfocusingoncarbonreduction.Otheragendaswillstillneedtobetakenforwardonacase-by-casebasis.

5.43 DefraandtheOGChavedevelopedguidanceofrelevancetodepartments,agenciesandthewiderpublicsector,settingoutwhyandhowclimatechangeadaptationshouldbefactoredintothepublicprocurementprocessonrelevantprojectssuchasestatesandinfrastructureforbothnew-buildandrefurbishment.ItwillbedisseminatedviaexistingOGCnetworks.DefraandOGCwillencourageRegionalImprovementandEfficiencyPartnerships,GovernmentOfficeNetworkandtheLocalandRegionalAdaptationPartnership(LRAP)todisseminateitthroughoutthepublicsector.

5.44 Theguidancewillhelpprocurementteamstoincorporateclimatechangerisksintodrawingupcontractualarrangementsanddecisionmaking.Itshowshowandwhyadaptationshouldbebuiltintodepartmentsandallpublicsectororganisationsprocurementprocesses,especiallyforcapitalbuildprogrammes,infrastructureprojects,refurbishments,facilitiesmanagementandgroundmaintenance.Embeddingadaptationinthesetypesofprojectsissupportedbyplanningpolicy,buildingregulationsanddesignstandardswhichareincorporatingmoreenvironmentalperformancestandardsandclimatechangeadaptationrequirements.

5PolicythroughProcurementActionPlan,OGC(2010),www.ogc.gov.uk/documents/PtP_Action_Plan.pdf

5.45 Projectsshouldbedesignedandbuilttobeclimateresilientfortheirexpectedlifetime,ratherthantheinitialcontractperiod–althoughthedesignlifewillvaryfromassettoasset.Forexample,itmaybe50yearsforaschool,10yearsforaroadsurfaceor50-100yearsforothertypesofinfrastructuresuchasabridge.Thepublicauthorityshouldparticularlyconsiderthelongevityoftheproject–withparticularattentiongiventoprojectsthathave:

1. alonglife-spane.g.measuresthatwouldbedifficultorexpensivetodointhefuture(e.g.retrofittingnaturalventilation);

2. thresholds,i.e.whethertheproject/assetbeingprocuredisvulnerabletospecificthresholdswhereclimateimpactsbecomeintolerable;and

3. flexibility–giventheuncertaintyoverthefutureclimate,climateprofilesshouldbeincludedincontractssothatriskisshared.

5.46 Assessmentoftheimpactofincludingadaptationintheprocessshouldincludethefinancial(e.g.maintenance)andeconomiccosts(e.g.servicedelays,flooding)thatmightbeavoided,andwhatothernon-monetisedcostsandbenefitshavearisenasaresultofincorporatingadaptationmeasures.

The Treasury’s capability to deal with adaptation

5.47 TheTreasuryisbuildingitscapabilitytointegrateadaptationwithinitsresources,skillsandprocessesinordertomanageclimaterelatedriskstopublicspendingandtheeconomy.SuccessfuldeliveryoftheTreasury’sDSOsdependsonbeingabletoidentify,assessandmanagethoserisks.

5.48 Overthelastyear,theTreasuryhasimproveditsadaptationresources,skillsandprocessesinvariousareas.SeminarsonUKclimatechangeprojectionsandclimatechangepolicyhavebeenheld.Keyteams,beyondtheTreasuryEnvironmentNetwork,withinterestsinadaptationissueshavebeenidentifiedandwereinvolvedinthepreparation


ofthisadaptationplan.GuidanceonincludingadaptationinGreenBookprocesseswaspublished.

5.49 Leadership.TheTreasury’sEnvironmentSteeringGroup(ESG),providesadedicatedforumforseniorengagementonenvironmentalpolicydevelopmentandoutcomes,includingadaptation,monitorsprogressagainsttheTreasury’sDSOsandprovidesstrategicdirectionandchallengetoTEN.TheESGischairedbytheSROforadaptation–theDirectorofPublicServicesandEnvironment.AdedicatedbriefonUKClimateResilience&AdaptationupdatestheESGmonthlyontheprogressofpolicytoensurethattheTreasuryseniorofficialscanmanagetheTreasurycontributionstothedevelopmentofcost-effectiveandefficientgovernmentpoliciestodealwithclimatechangeimpact.TheannualdepartmentaladaptationplanwillkeeptheESGinformedofpriorityadaptationissuesfortheTreasury.

5.50 Policy and Strategy.Asidefromensuringthestabilityandresilienceofthemacroeconomyingeneralandthefinancialservicesinparticular,theTreasurydoesnothavespecificpolicyresponsibilitiesdirectlyrelevanttoadaptation.PolicyareasrelatingtoclimatechangeandadaptationareprimarilyledbyvariousdepartmentsandarecoveredbyspecificspendingteamswithintheTreasury.Energy,EnvironmentandAgriculture(EEA)teamisresponsibleforthecontrolofspendinginDECCandDefra,alongwithdomesticadaptationandotheraspectsofenvironment,includingfloodriskmanagement.

5.51 The Treasuryisalsoreviewingtheavailableevidenceontheimpactsofclimatechangeontheeconomyandpublicspendingtoinformfuturestrategyandpolicydevelopment.Evidenceonclimateimpactswasusedaspartoftheevidencebasetoinformplanningforthe2007ComprehensiveSpendingReviewinDefra’ssettlementforfloodriskmanagementandupdated2009scenariosarenowavailabletosupportfuturedecisionsonclimateimpactrelatedpolicy.

5.52 People.TheTreasuryEnvironmentNetwork(TEN)worksacrossteamsanddirectorateswithintheTreasury.Itwasestablishedin2008tostrengthentheDepartment’scapabilityandconsistencyofadviceonenvironment-relatedpolicy,includingadaptation.CoreteamswithinTENareEnvironment,Energy&Agriculture,Environment&TransportTax,InternationalDevelopment&ClimateChange,EuropeanEconomicReformbutmembersaredrawnextensivelyfromotherteamsaswellwherethereisenvironmentalinterest.

5.53 In2009,twoseminarsweregivenbyDefraontheUKClimateProjections2009(UKCP09)toraiseawarenessofthelatestUKprojectionsofclimatechangeimpactsandtomakeclimatechangeamorerecognisedissueforpolicy,operationalandcorporateteams.TheTENinductioncourseincludesadaptationandinternalseminarsareheldonclimateimpactsandadaptation.

5.54 Partnerships.TheOGChasakeyroletoplayinaddressingadaptationissuesinthepublicsectorandworkscloselywithDefrainensuringthatadaptationistakenintoaccountingovernmentprocurement(§5.41)andonleadingagainstdeliveryontheSOGEframework(§5.37),whichnowincludesameasureonadaptationtoclimatechange.TheTreasuryspendingteamsworkcloselywithotherdepartmentsacrossarangeofpolicyareas,includingthosewhereclimatechangeandadaptationissuesareimportant.

5.55 Processes.Throughitsspendingteams,theTreasuryensuresthatrisksassociatedwithclimatechangearemanagedcost-effectivelyandefficientlyingovernmentpolicyasawholeaspartoftheusualprocessesforthecontrolandreviewofpublicspending.

The Treasury’s estates and assets

Estatesandassets

5.56 TheupdatedframeworkforSustainableOperationsontheGovernmentEstate(SOGE),includingameasureonadaptationtoclimatechange


andcomingintoforcein2011-12,isbeingrevisedbyDefra.Pendingthis,decisionsonmajorbuildingprojects,officemovesorrefurbishmentswillbeconsideredwithinthescopeofexistingadaptationplansagainstthetargetsandmandatesoftheexistingframework.

5.57 ThePropertyAssetManagement(PAM)Board,chairedbytheCorporateServicesDirector,developstheoverallpropertystrategy,includingthedrivetoachieveSOGEtargets,fortheHMTreasurygroupandmonitorsandreviewsprogress.

5.58 ThroughtheirEnvironmentalManagementSystemsandAnnualPlannedPreventativeMaintenancePlan(APPMP),theFMprovidersalreadytakeaccountoftheimpactsoffutureclimatechangeintheoperationsofthetwomainTreasurybuildings,oneinLondonandtheotherinNorwich.Floodingisconsideredtobetheprincipalriskinbothcases.Forexample,theabilitytopumpwaterfromthesub-basementof1HorseGuardsRoadwasenhancedduringrefurbishmentin2000-02.

5.59 ThefewotherpremisesoccupiedbymembersoftheHMTreasurygroupareleaseholdand,whereappropriate,workisinhandwithlandlordstoaddressadaptationissues.OneofthepremisesiswithintheRoyalLiverBuildinginLiverpool,wherefloodingisalsoarisk,andthelocalauthorityhasputflooddefencesinplace.

5.60 TheTreasuryhasrobustBusinessContinuityManagementstrategiesandplanstomanagesituationswhereitsbuildingsandservicesaredisruptedandunavailable.Thesearereviewedandupdatedannuallyandthiswillbeakeyactionfor2010tomaximisethebenefitofmodernisationactivityfortheinformationandcommunicationstechnology(ICT)andservices.ByusingaCabinetOfficeshared-serviceframeworkthemaindatacentreswillbehostedinhighqualitycommercialsitesandthedesktoppolicywillenableremoteworkingfromhomeorothergovernmentdepartmentofficeswithinthesharedservicecommunity.

5.61 AcomprehensiveclimatechangeriskassessmentwillbedevelopedbythePAMBoardin2010toenableaRiskRegistertobepreparedforthewholeHMTreasurygroup.TheoutputswilldrawonbestpracticeacrossgovernmentandwillinvolvecloseconsultationswiththewiderChancellor’s‘family’.


HM Treasury priorities for action on adaptation

Policiesandresponsibilities

DSO Action planned or commenced

SRO Measure of success Date start

Target end date

1.DSO1–Maintainsoundpublicfinances

WorkwithotherDepartments,seekingappropriateevidenceonspendingproposalstomanagerisksormitigateimpactsofclimatechange.

DirectorofPublicServicesandEnvironment

Risksaroundadaptationtakenintoaccountindecisionswhererelevant,toensurestabilityofthepublicfinances.

ongoing ongoing

2.DSO2–Ensurehighandsustainablelevelsofeconomicgrowth,well-being&prosperityforall

UsetheforthcomingClimateChangeRiskAssessmentandAdaptationEconomicAnalysistobetterinformevaluationofclimatechangerisks,economicimplicationsandpolicyresponse.

DirectorofPublicServicesandEnvironment

Increasedunderstandingofthecostsandbenefitsofadaptation,feedingintopolicydecisionsandleadingtoreducedrisksaroundeconomicgrowthandprosperity.

2010-11 2012

3.DSO2(e)–Supportingfair,stableandefficientfinancialmarkets

JointlywithDefraasleaddepartment.

WorkwiththeInsuranceindustrytoensurethatclimatechangerisksareborneinthemostappropriateandefficientwayfollowingtheendingofthecurrentstatementofprinciplesin2013.

DirectorofFinancialServices(forHMTreasurywork)

Climatechangerisksaremanagedinthemostappropriateandefficientwaypost2013.Coverremainswidelyavailablethroughasystemthatencouragestheimplementationofresiliencemeasuresandminimises,moralhazard.

ongoing 2013

4.DSO1 OGCtoworkwithotherDepartmentsbymonitoringtheirprogressonadaptationtargetsagreedundertherevisedSOGEframework.

Government’sChiefSustainabilityOfficer

Departmentsreachlevel4preparednesstotheimpactofclimatechange.

2010 2015


Gap/weakness identified

Solution/Action Measure Implementation date

SRO/ lead team Completion deadline

Raiseawarenessofadaptationissuesfurthertoputitonanequalfootingwithmitigation.

UseTENeventsandexternalspeakerstobroadenknowledgeandunderstanding.

Greaterdiscussionandconsiderationofadaptationinpolicydevelopment

2010 DirectorofPublicServicesandEnvironment

Environment,Energy&Agricultureleadteam

ongoing

Capabilitybuilding

Estates

Investment decision Action to be taken Deadline SRO

EMGapprovalforITServiceprovisiontobethroughtheCabinetOfficesharedservicearrangement.

ReplacetheITinfrastructurewithamoderncommercialprovisionthatismoresecureagainstclimatechangethreats.

EndofFY2010-11 HeadofInformationandWorkplaceSolutions

AnyfutureHMTreasuryestatesandassetsdecisionthatrequiresclimatechangeimpactstobetakenintoaccount.

Preparealistofclimatechangeriskstotheestateandcarryoutariskassessmentreadyforinclusioninariskregisterandfutureactionplans.

2010 HMTreasuryPropertyChampion

HM Treasury contacts

This document can be found in full on our website at: hm-treasury.gov.uk

If you require this information in another language, format or have general enquiries about HM Treasury and its work, contact:

Correspondence and Enquiry Unit HM Treasury 1 Horse Guards Road London

SW1A 2HQ

Tel: 020 7270 4558 Fax: 020 7270 4861

E-mail: [email protected]

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