United Kingdom

We rate the UK’s current policies until 2030 as “Insufficient”, when compared to modelled domestic pathways. A chronic failure to develop and implement new measures means that the chance of the UK meeting its climate targets has worsened over the past year. Our estimate of the UK’s emissions projections under current policies has increased by 16-19% compared to our 2022 update. That increase, coupled with an update of our modelled domestic pathways to the latest science (the AR6 scenario dataset) has resulted in the UK's policies being rated as "Insufficient" whereas previously they were rated as "Almost Sufficient".

Critical gaps remain in most sectors, with under 20% of the emissions cuts needed to reach the UK’s climate targets covered by credible policy (CCC 2023a). Current policies are expected to reduce emissions to 340–394 MtCO₂e/yr in 2030, or 50–57% below 1990 levels (excl. LULUCF). Emissions could be even higher when the weakening of key climate policies in September 2023 are fully accounted for.

The UK’s stalling progress in climate policy development means that the UK can no longer be considered a leader in global climate action. The “Insufficient” rating indicates that the UK’s climate policies and action in 2030 need substantial improvements to be consistent with limiting warming to 1.5°C. If all countries were to follow the UK’s approach, warming would reach over 2°C and up to 3°C.

Further information on how the CAT rates countries (against modelled domestic pathways and fair share) can be found here.

The UK’s emissions projections have worsened considerably since the last CAT update in October 2022, as continued delays to policy design and implementation, and active weakening of key existing policies demonstrate a serious lack of commitment to reducing emissions. Any claim the UK has to climate leadership is now being severely undermined by the actions of the UK Government. To regain credibility on the global stage, the UK needs to reverse this trend and start implementing ambitious, credible and coherent policies .

The central document guiding UK climate policy has been the Net Zero Strategy (UK Government 2021b). This provides an overarching picture on the UK’s climate policy at a sectoral level out to 2050. However, it failed to quantify the impact of the individual policies contained within it. This lack of quantification was found to breach the UK’s legally binding Climate Change Act (Justice Holgate 2022, Royal Courts of Justice 2022). The UK High Court ordered the government to provide an updated strategy by March 2023, and to provide improved clarity on how much the government’s policies would reduce emissions.

In March 2023, the government duly provided an updated Net Zero Strategy, dubbed the “Carbon Budget Delivery Plan” or CBDP (DESNZ 2023a). The CBDP only focused on the path out to the Sixth Carbon Budget of 2037, and did not provide new information on post-2037. As well as providing the CBDP, the government released a slew of other policy documents, totalling around 3,000 pages.

The CBDP and accompanying documents represent a high watermark for transparency around the UK’s climate policy, enabling new levels of scrutiny of the underlying measures by which the government intends to reduce emissions.

However, this transparency has simply highlighted that the government is asleep at the wheel when it comes to climate policy development. The credibility of UK climate policy has declined noticeably over the last year, leading to a reduction in the CAT’s overall ranking for the UK. This is due to three separate issues:

First, the UK is actually reducing the ambition of its climate policies. The UK’s updated Net Zero strategy was less ambitious than the strategy provided in 2021 (DESNZ 2023a). And in September 2023, the UK Government further weakened a range of key policies essential for cutting emissions (Francis 2023).

The government delayed the 2030 date for ending sales of new petrol and diesel cars to 2035, weakened the ban on new gas boilers in 2035 to an 80% level, and scrapped a requirement for landlords to improve the energy efficiency of their properties by 2025. These are major reductions in the ambition of UK climate policy, just at the time that we need to see an acceleration of action to limit warming to 1.5°C.

Second, there have been continued delays in developing key policy documents. Of the 205 recommendations made to government by the Climate Change Committee (CCC) in 2022, there has only been good progress in 26, or 12% (CCC 2023a).

These continued delays means the roll-out of low-carbon technologies needs to be even steeper, which leads to greater delivery risks. With 2030 only seven years away, every month of wasted action worsens the chances of the UK achieving its 2030 NDC. These delays are particularly pressing in the development of sectoral plans for electricity system decarbonisation and for agriculture and land-use.

The UK’s latest climate policies were reviewed by the Climate Change Committee (CCC), in its annual progress report in June 2023 (CCC 2023a). This found that UK emissions would essentially flatline from 2022 onwards if only credible policies were accounted for. This represents a critical lack of alignment with the 1.5°C limit, which would require global emissions to roughly halve over the decade (Climate Analytics 2023).

The CCC found that 20% of the emission cuts needs to achieve the UK’s climate targets are covered by credible policy. It also suggested that a further 34% could be closed by policies which are broadly credible but contain some risks.

Using this data, and converting to the CAT emissions standard (AR4 GWPs excl. LULUCF), we calculate that under current policies which are credible or contain some risks to delivery, the UK’s emissions in 2030 would be between 340–394 MtCO₂e/yr. This is 50–57% below 1990 levels, leaving an emissions gap of 87–140 MtCO₂e that needs to be addressed by additional climate policy.

However, we highlight that the CCC conducted this assessment in June 2023, prior to the government U-turns on climate policy in September 2023. As such, UK emissions could be even higher by 2030 than estimated here. It is not clear how large an impact these latest U-turns will have on overall emissions, as the momentum is already building in the transition to electric vehicles and heat pumps, and changes in consumer appetites may prove unstoppable. However, given the urgency of the climate crisis, it is deeply irresponsible to water down key climate policies at this time, and sends completely the wrong message to the global community on the UK’s commitment to climate action.

Key areas where policy development is needed include:

• Publishing overarching sectoral strategies to drive system-wide decarbonisation. There are still no such sectoral plans for the electricity, agricultural and land-use sectors, despite repeated calls for their development.
• Buildings decarbonisation, where a wide range of indicators demonstrate that the UK is significantly off-track, in both uptake of low-carbon heating and energy efficiency measures. The number of homes installing energy efficiency measures fell from 2021 to 2022, with insufficient and inconsistent funding a key barrier to action.
• Industrial electrification, which unlike hydrogen and CCS, has no business models to support it.
• Behavioural and societal change. When asked to quantify the emissions savings from its modal shift policies in transport, the government decided instead to remove them from the quantification. This demonstrates a worrying lack of commitment to modal shift which needs to be addressed as a priority. There is also continued overreliance on technological innovation to deliver emission reductions in aviation and agriculture, rather than supporting and accelerating demand reduction strategies.

In many areas climate policy is not being developed fast enough. In some areas, policy is actively moving in the wrong direction. Nowhere is this clearer than fossil fuel supply, where the UK is actively supporting new oil and gas licenses in a move that undermines the credibility of the UK’s climate targets (Walker 2023). The government’s move to expand oil and gas production is short-sighted, incompatible with 1.5°C, will not materially affect the UK’s energy security, and makes a mockery of the UK’s claim to be a climate leader.

During COP26 in Glasgow in 2021, a number of sectoral initiatives were launched to accelerate climate action. At most, these initiatives may close the 2030 emissions gap by around 9%—or 2.2 GtCO₂e, though assessing what is new and what is already covered by existing NDC targets is challenging.

For methane, signatories agreed to cut emissions in all sectors by 30% globally over the next decade. The coal exit initiative seeks to transition away from unabated coal power by the 2030s or 2040s and to cease building new coal plants. Signatories of the 100% EVs declaration agreed that 100% of new car and van sales in 2040 should be electric vehicles, 2035 for leading markets. On forests, leaders agreed “to halt and reverse forest loss and land degradation by 2030”. The Beyond Oil & Gas Alliance (BOGA) seeks to facilitate a managed phase out of oil and gas production.

NDCs should be updated to include these sectoral initiatives, if they’re not already covered by existing NDC targets. As with all targets, implementation of the necessary policies and measures is critical to ensuring that these sectoral objectives are actually achieved.

• Methane pledge: The UK signed the methane pledge at COP26. Methane represented 13% of the UK’s GHG emissions in 2020 and is concentrated in the agricultural and waste sectors. While there are policies to reduce methane emissions from the waste sector, there is still no current policy framework to reduce agricultural emissions , despite repeated calls for this to be developed (CCC 2022b, 2023a).
• Coal exit: The UK signed up to the coal exit pledge at COP26 and aims to phase out coal in the power sector by 2024. In 2021, coal provided only 2% of UK electricity generation, compared to 40% a decade ago (BEIS 2022b).
• 100% EVs: In the run-up to COP26 in 2021, the UK confirmed that it aims to phase out the sale of petrol and diesel cars and vans by 2030, and all hybrids by 2035. However, in September 2023, the government reneged on this commitment, delaying the phase-out until 2035 (Francis 2023). This is a deeply regrettable decision which will hamper the growth of the second-hand market for electric vehicles and cost the public up to GBP 6bn (ECIU 2023b).
• Forestry: The UK signed the forestry pledge at COP26. The UK has one of the lowest levels of forest cover in Europe, at 13% in 2021. However, the rate of afforestation has remained broadly flat since 2019 (CCC 2023a), meaning that planting rates would need to more than double in the next two years to achieve the UK’s target of 30,000 ha of tree planting by 2025.
• Beyond oil and gas: The UK Government is not a signatory of the beyond oil and gas alliance. The Welsh Government is a signatory, although current oil and gas extraction in Wales is minimal. In contrast, the UK Government is reiterating its support for new oil and gas extraction (UK Government 2023a), having already approved new fields this year (Oil and Gas Authority 2023).

Summary

The decarbonisation of the UK electricity sector has been a success story of the past decade, as consistent and coherent policy has supported renewables deployment and driven coal out of the electricity mix. However, a lack of policy development puts future progress on power sector decarbonisation at serious risk.

Power sector emissions fell, on average, by 10% per year between 2012–2022 (BEIS & DESNZ 2023b), and coal provided under 2% of electricity generation in 2022, down from 40% a decade ago (Ember 2023). Meanwhile, generation from zero carbon sources (renewables and nuclear) reached 56% in 2022, with 41% of this coming from renewables.

However, limited policy progress has been made in recent years. In particular, the government still lacks a credible overall strategy for achieving clean electricity by 2035. Without an overarching strategy, the government’s target remains a merely aspirational goal, unsupported by the policy frameworks necessary to achieve concrete change.

Offshore wind deployment is also stalling, with no new farms agreed in the latest government auction (Savage 2023). Offshore wind will be crucial to reaching the UK’s climate targets, and this failure to secure new projects this year could increase electricity bills by the order of GBP 1 bn per year (ECIU 2023a).

Overall, only 30% of the emissions reductions required to achieve the government’s targets in the power sector are covered by credible policies, down from 72% in the previous assessment (CCC 2022b).

The UK’s climate policy on fossil fuel supply is critically off-track for 1.5°C. Rather than following the science, and ending exploration for new fossil fuel projects (IEA 2022b), the UK Government is doubling down on its support for oil and gas exploration. New oil and gas fields are still being approved (Oil and Gas Authority 2023), and a new licensing round will be held in Autumn (Walker 2023). New oil and gas licenses will increase global emissions (CCC 2023a), risk becoming stranded assets, and will not improve the UK’s energy security (Reid 2023).

Between 2022 and 2025, up to 46 new oil and gas projects could be approved, producing up to 900 MtCO₂e (Greene 2022). This is over two years of the UK’s annual emissions. The UK also recently approved its first new coal mine in 30 years in a move which dealt a major blow to its credibility as an international climate leader (Farmbrough 2022) and was widely condemned by experts (Harvey 2022). Only 17% of the emissions reductions required in the fuel supply sector are currently covered by credible policies (CCC 2023a).

Electricity

In mid-2021, the UK confirmed it will bring forward the date for the phase-out of coal-fired power by one year to 2024. A 2024 phase-out makes the UK a world leader in this regard, and is well ahead of the 2030 phase-out date for OECD countries required to limit global warming to below 1.5°C (IEA 2021).

In the Net Zero Strategy, the UK committed to achieving 100% clean electricity by 2035, subject to security of supply (UK Government 2021b). This commitment has been repeated in the Carbon Budget Delivery Plan of 2023 and the Powering Up Britain policy paper (DESNZ 2023f, 2023a). What is lacking however, is detailed policy mechanisms which would achieve this. There remains no overarching plan to deliver a clean power sector that is resilient not only to average weather, but potential climate extremes (CCC 2023b). This continued lack of action is severely undermining the UK’s ability to meet its target of clean electricity by 2035.

Key to achieving clean electricity by 2035 is accelerated renewables deployment. Here the UK’s historical success at supporting renewables deployment is at risk, with the rate of deployment off-track with the step change needed to achieve the UK’s targets.

The UK has a range of policies to support renewables deployment. The central policy is the Contract for Difference (CfD) scheme, which offers a guaranteed price to renewable generators over their lifetime, with the price set by reverse auctions. This has encouraged competition and innovation in the sector and driven large-scale investment and deployment. Wind capacity more than doubled in the past decade to 28 GW in 2022, while solar capacity grew from 3 GW in 2013 to 14 GW in 2022 (IRENA 2023). However, in the latest auction, no new offshore wind farms were funded, as government support fails to keep track with rises in material costs driven by inflation (Savage 2023). This is a worrying sign and the Government needs to ensure sufficient policy support is in place to continue to accelerate offshore wind deployment.

The government recently increased the frequency of CfD auctions to occur annually (UK Government 2022h), allowing onshore wind and solar to compete for funding again (BEIS 2020).

However, despite these changes, renewables deployment remains off-track for the UK’s climate targets, particularly for solar, where only 0.7 GW was installed in 2022 (CCC 2023a). This rate needs to grow six-fold to achieve the government’s target to reach a total installed capacity of 70 GW solar PV by 2035.

The government envisages that nuclear will play a key role in decarbonising the electricity system, aiming to source up to 25% of electricity from nuclear in 2050 (BEIS 2022a). Historically, construction of nuclear power stations in the UK have been over budget and behind schedule (Chuter 2022), and largescale reliance on nuclear may therefore be risky. Although nuclear electricity generation does not emit CO₂, the CAT does not see nuclear as the solution to the climate crisis. This is due to the risks associated with nuclear generation such as nuclear accidents and proliferation, the high and increasing costs (compared to alternatives such as renewables), the long construction times, the incompatibility of inflexible nuclear plants with a flexible supply of electricity from wind and solar, and its vulnerability to heat waves.

Fossil fuel supply

Achieving the UK’s climate targets will require strong and sustained reductions in oil and gas production, as well as improvements to the emissions intensity of any remaining extraction. Oil and gas demand will need to fall around 30% by 2030 to achieve the UK’s NDC (CCC 2020). The CCC also suggested that the emissions associated with oil and gas extraction should fall 68% by 2030, through electrification of processes and addressing fugitive emissions (CCC 2020).

The UK’s policy ambitions in this sector are markedly lower. The government aims to cut emissions associated with fuel extraction by only 50%, rather than 68% (DESNZ 2023a), and has also refused to bring forwards the ban on flaring from 2030 to 2025 (George 2023). In comparison, Norway ended this practice in 1971.

Most worryingly, the government is also continuing to support new oil and gas extraction in the North Sea, recently approving the Abigail, Jackdaw and Talbot fields (Tidman 2022, Thomas 2022, Oil and Gas Authority 2023). A new licencing round was held in autumn 2022, with over 100 bids received. The government will also award new licences this year (UK Government 2023a), with no mention of projects having to pass the previously designed ‘climate compatibility checkpoint’ to be approved (BEIS 2022a).

Up to 46 projects could be approved by 2025, generating 900 MtCO­₂ of cumulative emissions (Greene 2022). This is in stark contradiction to the IEA’s conclusion that to limit warming to 1.5ºC, no new fossil fuel projects should be approved from now on (IEA 2022b). It also could reduce the UK’s energy security, as competition for a shared skill-base means that oil and gas expansion could slow down offshore wind deployment (Reid 2023).

Recent analysis suggests that the UK should end oil and gas production by the mid-2030s under a fair-share interpretation of the remaining carbon budget (Calverley and Anderson 2022) – highlighting the need for the UK to go further in setting a clear ambition to phase out fossil fuel production from the North Sea.

In a significant blow to the UK’s credibility on the global stage, the UK also approved the first new coal mine for over 30 years in late 2022 (Farmbrough 2022). This coal will almost certainly be exported for the global market, as the UK’s steel sector is unlikely to require this coal (Savage 2022). The mine will therefore not improve the UK’s energy security, and represents a trading of the UK’s international reputation for a small number of jobs in a dying industry.

Summary

The transport sector is the largest source of emissions in the UK, representing 27% of emissions (BEIS & DESNZ 2023b). Central to decarbonising transport is ending the sale of fossil fuel cars and vans by 2030 and fossil fuelled heavy goods vehicles (HGVs) by 2035–40 (Department for Transport 2021b). However, in September 2023 the UK Government announced it would delay the phase-out date for new petrol and diesel cars to 2035 (Francis 2023).

The government’s updated Net Zero strategy was less ambitious than the initial strategy, due to reduced ambition on modal shift and a realisation that hybrid vehicles result in 3-5 times fewer emissions savings in the real-world than previously assumed. As a result, in June the CCC estimated that only 38% of the emissions reductions required to align with the UK’s climate targets were covered by credible policy in the transport sector , down from 46% in the previous, 2022 assessment (CCC 2022b). This fraction could be even lower now that the government is weakening the phase-out of new petrol and diesel vehicles.

Key delivery risks in the UK’s transport sector include measures to cut car demand and support a transition to more sustainable modes of travel, and a general dependency on technological solutions which are unlikely to be cost-effective and bring large delivery risks, should the pace of technological development not match the government’s expectations.

Road transport

The UK Government claims that delaying the phase-out of new petrol and diesel vehicles is a “pragmatic” step which will cut costs for drivers. The reality, however, is very different. With only one in five UK drivers buying new cars, most drivers are dependent on the second-hand car market. Delaying the transition to EVs (which are already cheaper to run and will soon be cheaper to buy up-front) will slow the growth of the second-hand market and could cost consumers up to GBP 6bn (ECIU 2023b). This U-turn severely undermines industry confidence in the UK’s commitment to the energy transition. The move has been condemned by many car manufacturers with plans to invest in the UK’s production of electric vehicles (Pickard et al 2023).

In 2023, the government confirmed it would support the transition to electric vehicles with a zero emissions vehicle (ZEV) mandate, setting legally binding targets for sales of ZEVs from 2024 onwards, as well as CO₂ emissions regulations for the remaining fossil-fuelled car fleet (Department for Transport 2023b). This is welcome, and appears to be unchanged, despite the move to delay the phase-out date in September 2023.

Battery electric vehicles represented 17% of UK car sales in 2022, up from 12% in 2021 (SMMT 2022). This rapid growth is above the government’s own projections of the deployment rates needed to achieve the UK’s climate targets (CCC 2023a). It may be that the government's delay in the phase-out date for new petrol and diesel vehicles has come too late to have a large impact – but it is too early to tell. However, delaying the phase-out date will likely reduce consumer demand for EVs (even if only slightly), which could make it harder for car manufacturers to meet the ZEV mandate. It therefore only makes the transition to clean transportation harder, rather than easier, and is a deeply regrettable move.

The government has also committed to end the sale of fossil fuel heavy goods vehicles (HGVs) by 2040, with sales of smaller trucks banned by 2035 (UK Government 2021b). The government has already allocated GBP 19m to support small-scale trials of different zero-carbon HGV options and announced an additional GBP 200m to support a three-year programme of further trials (UK Government 2022a).

Active and public transport

During the COVID-19 pandemic, the UK Government announced GBP 5bn of funding to encourage greater use of walking, cycling and bus travel, with a series of measures intended to limit traffic growth. (Department for Transport 2021a, 2022a, 2020)

However, in the past year the Government has made little progress on supporting the shift away from cars. There have been some positive developments, most notably a £2 fare cap on bus fares which is set to be extended to 2024 (Department for Transport 2023a).

However in a worrying move, the UK’s latest Net Zero Strategy removed most of the emissions savings from policies aimed at reducing car usage (CCC 2023a). When asked to quantify the emissions savings from these policies, the Government chose to drop them from its analysis instead. This signals a lack of commitment to driving modal shift which will make the UK’s transport decarbonisation more heavily dependent on technological innovation. Given that transport decarbonisation will require fewer cars, as well as cleaner cars (Winkler et al 2023), this remains a key policy gap to close.

Aviation

In 2022, the UK released its Jet Zero Strategy which aims to reduce emissions from this sector to net zero, by a combination of emissions reductions and offsetting (Department for Transport 2022b). This aims for domestic aviation to reach net zero emissions by 2040, and total aviation emissions to reach net zero by 2050. The key commitments of the Jet Zero strategy were reinforced by the Carbon Budget Delivery Plan (DESNZ 2023a).

The UK’s current strategy relies heavily on speculative technological innovation and carbon dioxide removal to enable a ‘net zero’ aviation sector. In the strategy, the use of sustainable aviation fuel (SAF) reaches 10% of overall fuel use by 2030. This is five times the level included in the CCC’s balanced net zero pathway (CCC 2020) and would require an unprecedented scale-up of SAF production.

SAF deployment remains very low globally and has consistently failed to meet expectations (Rutherford 2022). Relying so heavily on this option therefore represents a major delivery risk. In 2050, the UK expects that aviation will still be emitting around 19 MtCO₂ per year, which will need to be compensated for by CO₂ removal. The strategy also ignores the non-CO₂ impact of aviation, which represents up to two-thirds of the sector’s overall climate impact (Lee et al 2021).

The Jet Zero strategy also fails to address demand. The Government states that “the sector can achieve jet zero without the government needing to intervene directly to limit aviation growth” (Department for Transport 2022b), and envisages that passenger numbers could rise 70% from 2021 to 2050. This is in contrast to the CCC’s advice, which was that no net expansion in airport capacity should be permitted, and passenger growth should be 25% at most (CCC 2020). Numerous airports are currently planning expansions or have received approval to expand in the past two years (AEF 2022), which again could threaten the UK’s ability to achieve its climate targets.

For more information on the need to align aviation and shipping emissions with the Paris Agreement, see the sectoral pages on international aviation and international shipping.

Summary

Buildings represented 17% of total UK GHG emissions in 2022, and there has been no significant reduction in emissions from this sector in the past decade (CCC 2023b).

There has been minimal development of climate policy to decarbonise the buildings sector, with the Government failing to close key policy gaps identified in recent years. In particular, there is a continued lack of policy to drive energy efficiency improvements and uptake of zero-carbon heating solutions such as heat pumps and district heating.

As a result, the CCC suggested in June 2023 that only 1% of the emissions reductions required to deliver the UK’s climate targets are covered by credible policy (CCC 2023a), down from 10% as of June 2022 (CCC 2022b). A further 23% are covered by policies which are broadly credible but display some form of delivery risks (CCC 2023a). Continued inaction on buildings decarbonisation is undermining UK climate policy development and leading to higher energy bills, particularly as the cost of gas remains high in the aftermath of the fossil fuel price crisis.

Uptake of low-carbon heat

Decarbonising the buildings sector will require a move away from natural gas, which provides around 75% of heating and hot water demand in the buildings sector. The Heat and Buildings Strategy includes a ban on the installation of all new gas boilers by 2035. This is much later than many European countries such as Germany, the Netherlands, France and Italy, who have announced bans in the 2020s (Bah 2022, Shrestha 2022, European Heat Pump Association 2023).

In September 2023, the government announced this ban would now only be partial, with exemptions covering around 20% of UK homes. This move makes the policy a much less effective signal about the direction of travel in low-carbon heating, and will likely slow the transition away from fossil gas boilers.

Heat pump installations are currently significantly below the levels needed to achieve the Government’s target of 600,000 annual installations by 2028 (which itself lags the CCC’s target of 900,000 installations by 2028). Only 10% of this number was installed in 2022, meaning a huge acceleration in heat pump deployment will be needed to achieve these levels. The UK has the lowest levels of heat pump installations per capita in Europe (Lowe 2023), where the Russian invasion of Ukraine and fossil gas price crisis has accelerated deployment (Rosenow and Gibb 2023).

A key blocker of low-carbon heat deployment is the lack of clarity from the Government on the strategic direction of heat decarbonisation. Despite clear evidence of the merits of electrification in buildings decarbonisation (IEA 2022a), the Government has yet to provide a decision on the relative role of electricity and hydrogen in buildings decarbonisation. This decision is due only by 2026, and the latest Government documents still left room for hydrogen to play a “major role” in heat provision (DESNZ 2023a).

This indecision creates unnecessary uncertainty for industry and is hindering the growth of critical supply chains and infrastructure for low-carbon heat. The Government should act swifty to set a clear strategic direction in favour of electrification as the central means of buildings decarbonisation.

Energy efficiency

The fossil fuel price crisis provided a clear incentive to accelerate efficiency improvements in the UK’s buildings sector, which are among the leakiest in all of Europe (Thurston 2023). Instead, the number of fabric efficiency improvements fell in 2022 compared to 2021 (DESNZ 2023c, 2023b), and remains at a fraction of the levels required to achieve net zero by 2050.

The UK’s lack of commitment to efficiency improvements is seen in both funding and policy development.

On funding, the Government pledged to spend GBP 6.6bn over 2020-25 on buildings decarbonisation. However, a third of this money remains unspent (E3G 2023b). The overall sum pledged is also insufficient to achieve the level of efficiency improvements needed to meet the UK’s climate targets. A combination of insufficient ambition, and slow progress on delivering the promised sums, means that there is a GBP 5.3bn investment gap for energy efficiency that needs to be closed by 2025 (E3G 2023b).

On policy, in September 2023 the Government watered down a commitment to ensure that landlords improved the energy efficiency of their properties by 2025. This means there are very little incentives for landlords to improve the efficiency of their properties, which will saddle renters with high cost energy bills.

The government now has a track record of inconsistent support for energy efficiency measures in the buildings sector (NIC & CCC 2022). The stop-start nature of funding, coupled with a lack of skilled retrofit assessors and rising material/regulation costs are combining to present a major barrier to the growth of the energy efficiency supply chain (CCC 2023a).

Summary

The UK’s Industrial Decarbonisation Strategy (UK Government 2021a), aims to reduce industrial emissions by two-thirds relative to 2018 levels in 2035 and 90% by 2050. While emissions fell 3% in 2022 to 63 MtCO₂e, they will need to fall much faster, at around 8% per year, to achieve the government’s climate targets (CCC 2023a)

The strategy has a three-pronged approach: switching to low carbon fuels, efficiency gains, and carbon capture and storage (CCS). Of the abatement required out to 2037, around 70% has either no policy, or policies which display significant deliver risks (CCC 2023a). Key areas for improvement include greater action to drive resource efficiency in industry, and policy to incentivise industrial electrification. In these areas there has been, at best, marginal progress in the last year, making them key blockers to successful industrial decarbonisation.

Fuel switching

Around 60% of industrial final energy is provided by fossil fuels (UK Government 2022d). This will need to be reduced substantially on the path to net zero. Two key options are the use of hydrogen, and direct electrification.

The Industrial Decarbonisation Strategy sets a target of 50 TWh of fossil fuels to be replaced by low-carbon alternatives in 2035 in the manufacturing sector (UK Government 2021a). This is roughly a third of industrial fossil consumption in 2021 (UK Government 2022d). To support this target, the government introduced the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme.

This is similar to the CfD scheme in the power sector, providing financial support to cover the additional cost of low-carbon hydrogen production. GBP 100m has been allocated to support fuel-switching in 2023, with a further GBP 40m to be allocated in 2024. This provides a business model to support industrial fuel-switching to hydrogen and is a positive step. There is also a GBP 240m Net Zero Hydrogen Fund (DESNZ 2023d). While these funds are to be welcomed, they are much smaller than the scale of funds being offered in Europe to support hydrogen deployment (Abnett 2023).

However, there is no comparable model for industrial electrification, despite the significant potential (Madeddu et al 2020). The Government has a range of smaller initiatives to drive industrial electrification, but without a comprehensive business model, electrification of industry risks falling behind.

Carbon capture and storage

The UK Government aims to deliver 6 MtCO₂/yr of industrial CCS by 2030, and 9 MtCO2/yr by 2035. This represents around 17% of total abatement in the industrial sector by 2035 (CCC 2023a). This ambition is supported by the GBP 1bn CCUS infrastructure fund, as well as a business model for industrial CCS which will cover the additional costs for fitting carbon capture to industrial applications. Relying too heavily on CCS to deliver emissions reductions in the industrial sector could be risky, as the majority of previous CCS projects have ended in failure (Abdulla et al 2021). In many sectors, the role and value of CCS is also being eroded as the cost of renewables declines (Grant et al 2021b, Luderer et al 2021). CCS should be prioritised for applications where there are few alternatives, such as cement production (E3G 2023a).

Resource and energy efficiency

The Government sees resource and energy efficiency as a key strategy for industrial decarbonisation, saving 11 MtCO₂e in 2035 (UK Government 2021b). This represents 27% of total abatement, more than from CCS, hydrogen or electrification alone. Policies to support energy efficiency include the Industrial Energy Transformation Fund and the Climate Change Agreements (UK Government 2022c).

However, more action is needed to drive industrial resource efficiency, in both the production and consumption of goods. Key to this is expanding the scope of current extended producer responsibility (EPR) schemes and improving data transparency on the production and use of industrial products (CCC 2022b).

Agriculture was responsible for 49 MtCO₂e of emissions in 2021, representing 11% of UK emissions (BEIS & DESNZ 2023a). Agricultural emissions increased from 2021 to 2022, and there has been essentially no progress made in agricultural decarbonisation over the past decade, with emissions in 2021 at the same level as in 2011.

However, the government has yet to set out a comprehensive plan to reduce emissions in this sector, and there are no credible policies to drive emissions reductions in operation (CCC 2023a). The need for a comprehensive strategy has been highlighted for multiple years, and so the government’s reticence to produce such a roadmap is disappointing.

The UK’s approach to agricultural decarbonisation is heavily reliant on measures which are technological and voluntary in nature. Over a third of total emissions reductions in agriculture are envisaged to come from technological innovation, particularly productivity improvements to free up agricultural land (CCC 2023a). Most of the measures envisaged to drive improvements are voluntary, meaning there is a high risk that uptake will not be large enough. Productivity improvements on their own will not necessarily reduce emissions, with a risk that farmers simply increase herd numbers instead of freeing up land. Policies need to be developed to address this risk.

The strategy also fails to address possible demand measures in agriculture, most notably dietary change and food waste prevention. The Government Food Strategy does not introduce measures to support and accelerate dietary shifts, despite the clear health benefits of doing so, and the evidence of consumer appetite for reduced meat consumption (UK Government 2022g, Stewart et al 2021). The Food Strategy also only addressed food waste from large businesses, despite the majority of food waste occurring at the household, farm and supply-chain stages.

The UK has updated the methodology it uses for calculating emissions from peatland which has turned the historical LULUCF sector from an emissions sink into an emissions source (Evans et al 2017, UK Government 2022f). Achieving a strong LULUCF sink in the UK will require protecting and restoring degraded peatland, and large-scale afforestation. However, current rates of tree planting and peatland restoration are significantly off-track (CCC 2023a).

The UK has one of the lowest level of forest cover in Europe, at 13% (Forest Research 2022b). The Government has set a target of planting 30,000 ha/y by 2025, which is aligned with the CCC’s recommendations. However, in 2021-2022 only 14,000 ha were planted, the majority of which were in Scotland (Forest Research 2022a). Tree planting rates would need to more than double in two years to achieve this target, which puts the Government’s commitment to afforestation in question.

Afforestation policy is the responsibility of the devolved administrations, with different policies in each region. In England, a legally binding target has been set to increase woodland cover from 14.5% to 16.5% by 2050, which would lead to tree-planting rates of around 10,000 ha/y from 2025 onwards (UK Government 2023b).

Over 80% of UK afforestation takes place in Scotland (Forest Research 2021), which recently updated its tree-planting targets from 12,000 ha/yr to 18,000 ha/yr by 2024/5, supported by public funding (Scottish Forestry 2021). Meanwhile, Wales aims to plant 43,000 ha of new forest by 2030 (Welsh Government 2021).

Progress in protecting and restoring degraded peatland is also significantly off track. The Climate Change Committee recommends that over 60,000 ha/yr of peatland is restored from 2025 onwards. But in 2022/23, only 13,000 ha were restored – less than a fifth of recommended levels (CCC 2023a). Key policy gaps include restrictions on the burning of peatland, where much peatland remains unprotected by current legislation, and phasing out the use of peat in horticultural products, where the sale of peat will only be fully banned by 2030 (The Wildlife Trusts 2023).