Sixth carbon budget: an unprecedented investment opportunity for UK plc

Today, the Aldersgate Group welcomed the publication of the Committee on Climate Change’s sixth carbon budget and its recommendation of an emission reduction target of 78% by 2035. The Group argued that this ambitious but feasible target represents a unique investment and supply chain growth opportunity for UK businesses. To be delivered on the ground, today’s carbon budget will need to be supported by rapid policy decisions in areas such as buildings, heavy industry and carbon pricing.

Reacting to the budget, Ana Musat, Head of Policy at the Aldersgate Group, said: “The CCC has set a huge, but feasible, investment challenge for the UK economy for the next 15 years and one where the private sector will have to do most of the heavy lifting. This budget represents an opportunity for the UK to get the economy going again as it emerges from the COVID-19 crisis and to invest in innovation, grow supply chains and create jobs in areas such offshore wind, EV manufacturing, low carbon industrial goods, building renovation and green finance. As more countries take on net zero emissions targets, the export opportunities for the UK could also be significant: by 2030, the global market for low carbon goods will be worth more than £1 trillion a year, representing an increase of 7 to 12 times on today, with the market for low carbon services growing in tandem.” [1]

Ana Musat added: “We welcome the recent steps taken by government to meet this ambition, including the publication of the Ten Point Plan and its commitments on offshore wind and the phase out of petrol and diesel vehicle sales. To support the private sector in delivering the ambition of the sixth carbon budget on time and at low cost, the Government now needs to put forward a comprehensive net zero delivery plan, which sets out clear policy signals for all key emitting sectors of the economy. [2]

Such a plan should include introducing binding energy efficiency performance standards and fiscal incentives that ensure that all new buildings are ultra-low carbon and that existing homes meet a level of energy efficiency of at least EPC band C by 2035 at the latest. Other key priorities should include strengthening the grid to support the full decarbonisation of the power sector by the end of the decade, setting up a UK Emissions Trading Scheme aligned with the net zero target with a starting price of at least £40 per tCO2 [3] and introducing measures such as product standards and green public procurement to grow the demand for ultra-low carbon industrial goods.” [4]