8th Report - The Seventh Carbon Budget

The Climate Change Committee’s advised level for the Seventh Carbon Budget is technically credible, but will require tough political decisions, and represents a necessary checkpoint in the UK’s statutory pathway to net zero by 2050. (Conclusion, Paragraph 30)

As the ‘low hanging fruit’ of decarbonisation has largely been achieved, delivery risk increases materially under the Seventh Carbon Budget, at the same time as delivery options are reduced (as represented by the CCC’s decision to produce a single balanced pathway rather than multiple pathways). Emissions reductions become more complex, more capital- intensive and more dependent on coordinated action across infrastructure, markets and behaviour. Without clear planning, sustained policy signals, transparency over delivery assumptions and credible contingency arrangements, the risk of under-delivery and unequal impacts will rise. (Conclusion, Paragraph 31)

The Government should legislate for the Climate Change Committee’s recommended level of 535 MtCO₂e for the Seventh Carbon Budget period. However, legislation must be accompanied by strengthened action to address the delivery risks identified in this report. (Recommendation, Paragraph 32)

The Government should consider additional measures that offer an opportunity to provide resilience and headroom against delivery risk, without damaging public consent for the measures. (Recommendation, Paragraph 33)

In legislating for the Seventh Carbon Budget, the Government should consider the United Kingdom’s contribution to global efforts to limit warming, alongside its domestic statutory framework. While the UK has exercised international leadership through the Climate Change Act 2008, the statutory net zero target and its 2035 Nationally Determined Contribution, continued leadership cannot be assumed. The credibility of the UK’s climate framework depends on domestic emissions limits 57 being consistent with its obligations under the Paris Agreement and its commitment to a just transition, as well as the coherence of its overall contribution to global climate action. (Conclusion, Paragraph 38)

The Government should set out clearly in the impact assessment that will accompany the draft Carbon Budget Order, how the proposed legislative level of the Seventh Carbon Budget aligns with the United Kingdom’s legally binding obligations under the Paris Agreement, including how CB7 enables the UK to meet its status as an Annex I Party, with heightened responsibilities under the UNFCCC. (Recommendation, Paragraph 39) Government delivery of the Seventh Carbon Budget

The Government must make sure its cross-departmental arrangements offer the clarity, authority and consistency required to deliver the Seventh Carbon Budget. As emissions reductions must accelerate sharply in the 2030s, delivery will depend on sustained, coordinated action across multiple departments and policy areas. Strong central leadership and clear mechanisms for collective responsibility are needed to avoid departmental priorities and policy signals diverging, undermining confidence in delivery of the carbon budget. (Conclusion, Paragraph 50)

Alongside the draft Carbon Budget Order for the Seventh Carbon Budget, the Government should publish a clear, indicative, cross-governmental delivery framework. The framework should demonstrate how departmental policies will be aligned, mutually reinforcing and consistent with the emissions limits set by Parliament. This framework should: • set out the respective roles and responsibilities of relevant departments in delivering the carbon budget pathway; • be explicitly endorsed by the Prime Minister’s Office and HM Treasury to demonstrate collective ownership; • provide transparency on how cross-government governance arrangements will operate in practice to resolve policy conflicts and oversee delivery; and • set out clearly how delivery shortfalls will be identified, addressed and allocated across departments, including where responsibility lies for corrective action within the overall carbon budget framework. (Recommendation, Paragraph 51) 58

Public perceptions are shaped not by ministerial statements alone, but by the cumulative impact of decisions taken across Government. Where policy choices in areas such as transport, buildings and infrastructure cut across climate objectives and are not aligned, they signal that net zero is a conditional ambition rather than a binding national obligation. This inconsistency has practical consequences and would slow the uptake of low-carbon technologies and deter long-term private investment, undermining confidence in the delivery of net zero and the Seventh Carbon Budget. The erosion of cross-party consensus on net zero further compounds this uncertainty at precisely the point when clarity, stability and sustained political commitment are most needed. (Conclusion, Paragraph 56)

DESNZ should provide clear, consistent and sustained cross-government leadership on communication of net zero policy. Policy announcements and public messaging should reinforce, rather than dilute, the urgency of emissions reductions and the long-term direction of travel required to deliver the Seventh Carbon Budget. (Recommendation, Paragraph 57)

DESNZ should set out a clear cross-sector prioritisation framework within the Seventh Carbon Budget Delivery Plan, explaining how limited low- carbon resources, including clean electricity, network capacity, sustainable feedstocks and land, will be allocated between competing demands. This framework should set out how priorities will be managed where policies across sectors draw on the same constrained resources, and how trade-offs will be handled to ensure that progress in one part of the economy does not displace or constrain decarbonisation elsewhere. (Recommendation, Paragraph 58)

DESNZ Ministers should provide visible cross-government leadership by setting out, in a single, authoritative statement within our recommended indicative delivery framework, how departmental policies collectively support delivery of the Seventh Carbon Budget. This should include clear objectives, indicative timelines and an explanation of how policies that risk increasing emissions or delaying progress will be mitigated, so that Parliament and the public can assess the coherence and credibility of the Government’s overall approach. However, DESNZ will only have the credibility, capacity and capability to do this if it is explicitly backed by the Prime Minister and the Chancellor of the Exchequer. This includes public statements, clear steers across government and the resources to ensure departments meet their agreed net zero commitments and work together when delivery requires it. (Recommendation, Paragraph 59) 59 Sectoral pathways to delivering the Seventh Carbon Budget

Delivery of the Seventh Carbon Budget will depend on major cross-sector changes in infrastructure, technology, and behaviour, many of which must be secured well before the 2038–2042 period begins. These changes will not occur automatically in response to ambition alone. Without early clarity on policy instruments, funding mechanisms, delivery governance, infrastructure sequencing and skills capacity, the pathway assumptions will not translate into delivery. (Conclusion, Paragraph 84)

Delivery risk is particularly acute in sectors that rely on technologies not yet available at scale and subject to significant cost, supply, and investment uncertainty. While policy frameworks exist in principle, they do not yet provide a sufficiently credible or transparent basis for delivering the scale of emissions reductions assumed in the Climate Change Committee’s pathway. Without clearer plans, Parliament, investors, and the public are being asked to take delivery on trust. (Conclusion, Paragraph 85)

Alongside the draft Seventh Carbon Budget Order, the Government should publish draft sector delivery plans setting out how each sector is expected to contribute to delivery of the budget. These plans should: • Set out the policy instruments that will be used and when they will take effect; • Identify the funding routes, including the balance between public support and private investment; • Specify the infrastructure required, with indicative sequencing and delivery milestones to ensure that grid expansion, planning reform and infrastructure readiness precede electrification and deployment surges; • Set out the behavioural, skills and capacity assumptions underpinning delivery; • Demonstrate how the sectoral plans align with each other and with wider Government strategies and policy frameworks, such as those affecting land use, infrastructure, industrial strategy and skills; • Explain how competing demands across sectors for constrained resources, including clean power, grid capacity, skilled workers, land and sustainable feedstocks, will be prioritised and managed, and how trade-offs between departmental objectives will be resolved to support delivery of the carbon budget as a whole. 60 • Set out how projected growth in electricity demand from data centres and other emerging energy-intensive sectors is factored into system planning and infrastructure delivery, including the implications for low-carbon generation, network capacity, and competing demands across the economy; • and, for sectors reliant on emerging or nascent technologies it should include pre-agreed contingency options and clearly defined and actively monitored trigger points to be activated if technologies are not delivered at the expected pace or scale. This should include explicit consideration of delivery capacity and skills constraints, to avoid poor implementation that could undermine public confidence. Together, these plans would strengthen Parliamentary scrutiny, provide greater transparency on

Delivery of the Seventh Carbon Budget relies on nascent technologies and on greenhouse gas removals, including both land-based approaches and engineered removals, some of which face significant uncertainty over scale, cost, and delivery timescales. While these options are necessary for addressing genuinely residual emissions, increasing reliance on them shifts delivery risk towards the later stages of the pathway. This defers, rather than resolves, uncertainty, reduces resilience and limits the scope for corrective action if earlier mitigation falls behind. (Conclusion, Paragraph 92)

The Government should ensure that delivery of the Seventh Carbon Budget is grounded primarily in early, high-confidence emissions reductions where possible. Greenhouse gas removals should be treated as conditional and supplementary, not as substitutes for mitigation. (Recommendation, Paragraph 93)

The Seventh Carbon Budget delivery plan should set out explicit contingency arrangements, identifying in advance how mitigation would be strengthened if nascent technologies or greenhouse gas removals are delayed or underperform. These contingencies should prioritise accelerating proven measures, including energy efficiency, electrification, and demand reduction, rather than increasing reliance on uncertain technologies later in the pathway. (Recommendation, Paragraph 94)

The Seventh Carbon Budget must deliver genuine emissions reductions, not reductions achieved by exporting emissions overseas. Meeting carbon budgets through offshoring would undermine their environmental purpose 61 and the integrity of the UK’s climate framework, and risks weakening public confidence in decarbonisation by creating the appearance of progress without reducing global emissions. (Conclusion, Paragraph 101)

Decarbonisation must not be confused with deindustrialisation. Allowing production to relocate abroad would weaken the UK’s industrial base while doing little to reduce global emissions. (Conclusion, Paragraph 102)

Delivering the Seventh Carbon Budget therefore requires a policy framework that supports domestic decarbonisation and provides long-term certainty for investment in low-carbon production in the UK. Without this, there is a material risk that progress towards the carbon budgets is achieved on paper rather than through real emissions reductions. (Conclusion, Paragraph 103)

The Government should set out clearly how its carbon budget policies will prevent the offshoring of emissions and support domestic decarbonisation, particularly in energy-intensive and trade-exposed sectors. (Recommendation, Paragraph 104)

The carbon budget delivery plan should provide clarity on how key policy mechanisms, including electricity price support, infrastructure delivery, and carbon pricing will operate together during the Seventh Carbon Budget period to support domestic investment and manage carbon leakage. (Recommendation, Paragraph 105)

The Government should also set out how free allocation under the UK Emissions Trading Scheme and the forthcoming UK Carbon Border Adjustment Mechanism will interact during the transition, with a commitment to review their combined effectiveness globally once the UK Carbon Border Adjustment Mechanism is in place. (Recommendation, Paragraph 106)

We reiterate our previous recommendation in our report on Airport Expansion, and that of the Climate Change Committee, that the Government should provide Parliamentary time to legislate to include international aviation emissions within carbon budgets and the UK’s net zero targets, before laying the draft Carbon Budget Order. This is increasingly important given the growing reliance on sustainable aviation fuels and international supply chains. (Recommendation, Paragraph 107) 62 Behaviour change, fairness, and the public mandate

Delivery of the Seventh Carbon Budget will depend more than ever on changes in how homes are heated, how people travel, and how energy and goods are used across the economy. We are concerned that, while behaviour change is a central assumption within the Climate Change Committee’s pathway, it is not yet being treated as a core delivery challenge in its own right. Without clear ownership, coordination and delivery planning, there is a risk that the scale of behaviour change assumed under the Seventh Carbon Budget will not be realised in practice. (Conclusion, Paragraph 115)

The Government should treat behaviour change for delivery of the Seventh Carbon Budget as a major national delivery challenge. Meeting this challenge should include sustained political leadership, clear accountability within Government, and coordinated action across departments. The Government should set out its approach to behaviour change within the Impact Assessment accompanying the draft Budget Order, supported by a costed public engagement and delivery plan with clear objectives, milestones, and reporting arrangements. (Recommendation, Paragraph 116)

Behaviour change should not be treated as an adjunct to technology deployment or as a matter of individual responsibility alone. Delivery planning should make full and explicit use of policy levers to shape prices, incentives, defaults, infrastructure and markets, so that low-carbon choices are affordable, accessible and practical at scale. The Government should support behaviour change in practice through a place-based approach to decarbonisation, ensuring that households are offered low-carbon options that reflect their housing type, local infrastructure and circumstances. (Recommendation, Paragraph 117)

Behaviour change at the scale required for the Seventh Carbon Budget will not occur by default. It depends on policies that tangibly improve everyday life for households and communities. Warmer homes, lower running costs, cleaner air and better local environments are not ancillary benefits of climate action, but essential delivery mechanisms. Where climate policy aligns with health, affordability and quality of place, behaviour change becomes feasible at scale. Without this alignment, the level of behaviour change assumed under the Seventh Carbon Budget will not be delivered. (Conclusion, Paragraph 122)

The Government should place delivery of co-benefits at the centre of its approach to the Seventh Carbon Budget. Policies intended to drive behaviour change should be designed from the outset to improve 63 affordability, health outcomes, air quality and local environments. Departments responsible for housing, transport, energy, planning and public health should be required to set out, within their contribution to the Seventh Carbon Budget Delivery Plan and Impact Assessment, how their policies deliver these co-benefits and enable the level of behaviour change assumed under the budget. (Recommendation, Paragraph 123)

Fairness is fundamental to the legitimacy of the Seventh Carbon Budget. Where transition costs are experienced early and unevenly, while benefits arrive later or are less visible, public consent cannot be assumed. The current approach to funding energy policy risks placing disproportionate burdens on households with the fewest options, while weakening incentives to move away from fossil fuels. If unaddressed, this risks undermining a central delivery pathway for the Seventh Carbon Budget. (Conclusion, Paragraph 129)

The Government should further prioritise reducing electricity costs by removing appropriate policy costs from electricity bills and funding them through general taxation. This would improve affordability for households and businesses, strengthen incentives for the electrification of heat and transport, and avoid placing additional costs on households that are not yet able to switch away from gas. Shifting policy costs from electricity to gas bills may improve price signals in the short term, but would risk unfairly penalising households who face practical, financial or housing constraints on electrification. (Recommendation, Paragraph 130)

Alongside the Seventh Carbon Budget Delivery Plan, the Government should publish a Fairness and Distribution Assessment setting out the expected distributional impacts of carbon budget policies, identifying groups at risk of disproportionate costs, including workers whose jobs are displaced by the transition, and the measures in place to support them. (Recommendation, Paragraph 131)

Public participation is an essential delivery requirement for the Seventh Carbon Budget, not a communications add-on. As decarbonisation increasingly depends on decisions taken by households and communities, public consent must be sustained through consistent leadership, honest explanation of trade-offs, and genuine two-way engagement that is rooted in credible, practical policy and visibly improves everyday life. (Conclusion, Paragraph 137)

The Government should set out its public participation approach for the Seventh Carbon Budget as a clear, resourced programme within the Seventh Carbon Budget Delivery Plan. This should focus on engagement, rather than just communications, and should: 64 • embed ongoing, two-way engagement, including deliberative processes at a national and local level, with transparent feedback loops showing how public input has shaped decisions; • use trusted messengers and independent advice, supporting local authorities, community organisations and industry practitioners to engage communities and guide households through key decisions, particularly on home upgrades; • ensure communications and policy are mutually reinforcing, with consistent cross-government messaging on the practical choices people are being asked to make; and • frame engagement around tangible co-benefits and fairness, including warmer homes, lower bills, cleaner air and improved health, while being clear about costs, constraints and the consequences of inaction. (Recommendation, Paragraph 138)

Local authorities are essential to delivering the Seventh Carbon Budget as it will rely on place-based action rooted in local knowledge, trusted relationships and visible local benefits. Without a clear mandate and sustained funding, the Government cannot credibly expect local authorities to deliver the scale of change assumed under the Seventh Carbon Budget. (Conclusion, Paragraph 142)

The Government must place local authorities at the centre of delivery of the Seventh Carbon Budget by: • legislating for a clear statutory duty for local authorities in relation to net zero delivery; and • providing long-term, predictable funding to support place-based delivery, including behaviour change, public engagement and household decarbonisation. (Recommendation, Paragraph 143) Parliamentary scrutiny of the Seventh Carbon Budget

We welcome the Government’s decision to invite us to undertake early scrutiny of the Seventh Carbon Budget. This represents a material improvement on previous practice and reflects growing recognition of Parliament’s role in scrutinising not just carbon targets, but the credibility of the plans intended to deliver them. (Conclusion, Paragraph 152)

However, experience shows that Parliamentary scrutiny of carbon budgets has too often been cursory. The Sixth Carbon Budget, despite setting a legally binding emissions limit with implications for public spending, 65 infrastructure and everyday life, did not remotely receive commensurate Parliamentary focus. That approach is no longer defensible. As delivery of carbon budgets becomes more complex, more intrusive and more politically contested, Parliament must be given adequate opportunity to scrutinise the assumptions, trade-offs and risks that underpin them. Robust scrutiny of the Seventh Carbon Budget is essential to democratic accountability and to sustaining confidence in its delivery. Parliament must not be reduced to a rubber stamp for legally binding climate decisions of this scale and consequence. (Conclusion, Paragraph 153)

The Government should support a formal, enhanced Parliamentary scrutiny framework for the Seventh Carbon Budget that enables meaningful scrutiny both before approval and throughout delivery, by an annual report on each Department’s progress towards time framed targets. Following the setting of the Sixth Carbon Budget, our predecessor Committee made a comprehensive set of recommendations on how Parliamentary scrutiny of future carbon budgets should be strengthened. We consider that those recommendations remain the most appropriate framework for scrutiny of the Seventh Carbon Budget, and we recommend that the Government implement them in full. In particular, the Government should adopt the approach set out below: • When Ministers announce the proposed level of the Seventh Carbon Budget, they should simultaneously lay before Parliament a draft carbon budget delivery framework, setting out the policies and proposals intended to deliver the budget, as described in Chapters 2 and 3, for scrutiny and debate. Ministers should give notice of a motion under Standing Order No. 118(3)(a) that the draft Order is not to be referred to a Delegated Legislation Committee in the House of Commons, but instead debated on the Floor of the House. • A defined period of three months of Parliamentary scrutiny should elapse between publication of the draft delivery framework and the laying of the draft Carbon Budget Order. While recognising statutory constraints, this period should be sufficient to allow committees to take evidence, publish reports, and engage constructively with Ministers on delivery feasibility and risk. • This scrutiny period will enable relevant House of Commons and House of Lords committees to examine elements of the draft delivery framework within their remits. The Secretary of State for DESNZ, who has principal responsibility for delivery, should agree to appear before the Environmental Audit Committee at an early stage. • The Government should arrange for a debate of