Some key insights from the UK Climate Change Committee’s Seventh Carbon Budget
What would it take for the UK to get to net-zero by 2050?
Can the UK get to net-zero? How could they get there? And how much will it cost?
It’s the UK Climate Change Committee’s task to answer these questions and advise the government on how to move forward. For context, the UK CCC is independent of the government but was set up as part of the UK’s Climate Change Act in 2008 to track progress and provide advice on how the UK can reach its climate targets.
Last week, it published its Seventh Carbon Budget. It’s packed with insights, so I thought I would share some of my key takeaways here. The original report is well-worth reading and Carbon Brief has also done excellent reporting on the results, if you want another take.
One thing to make clear from the start is that the UK CCC is not in the business of predicting what will happen. Nor is it there to prescribe exactly how we get there. It offers potential pathways that would allow us to get there — and hopefully in the most cost-effective way — while measuring the implications, costs, and co-benefits. It recommends what the future could look like; it does not predict what it will look like.
Before we get into the ‘how’ and ‘at what cost’, it’s worth a reminder of what the UK is setting out to do. As advised by the CCC, it should cut its greenhouse gases (from 1990 levels) by 89% by 2040 and reach net-zero by 2050.
Since it’s hard to track progress on targets decades away — and leads to a ‘kicking the can down the road approach’ — the UK has shorter-term “carbon budgets” that are typically in five-year increments. You can see our progress and future carbon budgets we still need to meet in the chart below. They have already approximately halved by 1990.
All-in-all, the UK has been doing pretty well, and has achieved its first three carbon budgets, although progress has slowed in the last four or five years.
Achieving our 2040 and 2050 goals would result in the following emissions reductions. You can see that the CCC is pessimistic that it will be able to eliminate methane and nitrous oxide emissions — which mostly come from farming — completely, so it will have to rely on negative CO2 emissions in the form of carbon removal in the 2040s to balance this out.
Electrification and the rollout of low-carbon electricity are doing most of the heavy lifting
How will the UK get there? The chart below shows the CCC’s latest pathway through to 2050. Each wedge shows the amount of greenhouse gases that each intervention will save.
Look at the big electricity chunk in the middle. This is where most of the savings are going to come from. Not only do we need to get rid of the gas currently in the electricity mix (shown as the yellow wedge), but we’ll also need to electrify many of our other major sectors. In bright orange, we have electric vehicles, followed by heat pumps and then the electrification of industry.
If you follow along with this newsletter, this shouldn’t come as a surprise. I’ve written about electric vehicles and heat pumps a lot, and I’ve talked about the huge efficiency gains that come from electrification (more on this later). I am very much aligned with the CCC on this.
Some of my readers — who think behaviour change should play a much bigger role — will be dismayed by how small the ‘demand’ wedge is. In fact, half of it is simply efficiency savings from things like home insulation. The dark purple is making low-carbon choices like shifts to cycling and public transport, more expensive flights to reduce flying, and cutbacks on meat and dairy consumption.
I would argue that some of the orange wedges — shifting to an electric car, or installing a heat pump — are also behavioural changes. But the distinction here is that they are easier substitution behaviours rather than “conservation” or abstinence ones. I’ll look at how the CCC models different behaviours such as meat consumption and miles driven later.
Hydrogen cars and heating are dead
They are very clear about this: “However, we see no role for hydrogen in buildings heating and only a very niche, if any, role in surface transport.”
And from their priority recommendations to the government: “Confirm that there will be no role for hydrogen in home heating.”
Hopefully we can now put this discussion to rest.
It makes little sense to waste electricity to produce hydrogen — which has conversion losses — rather than directly powering an electric car or heat pump.
We will provide more energy services while using much less energy in the first place
One of the huge benefits of decarbonisation and electrification is efficiency. When we burn fossil fuels, a lot (often most) of the energy is completely wasted as heat.
When we go straight to low-carbon power, and electrify transport and heating, we get rid of most of that waste.
That means that in a low-carbon energy system we can deliver more energy services — which is what we really care about — using less energy. Energy services include moving from A to B, the heat that keeps us warm (or cold air that keeps us cool), and the light from a bulb.
Look at the energy flow diagrams below, comparing our current system with what we could have in 2050.
You can see that on the right-hand side, “Energy services” increases by around 10%. Energy losses halve from 1000 TWh to 500 TWh.
On the left-hand side, the amount of primary energy we need to generate drops by around one-third.
If we care about eliminating waste, decarbonisation is the way to go.
Low-carbon tech is expected to keep getting cheaper, with electric cars reaching price parity in terms of upfront costs in the next few years
The plummeting cost of renewables and other low-carbon tech is the thing that has made me much more optimistic about the energy transition in the last 5 to 10 years. When the low-carbon option is also the cheaper option, people will be much more likely to make the switch.
The UK CCC expects the cost of low-carbon technology to keep falling.
The table below shows their projections for the costs of wind power, solar PV, electric cars, heat pumps, and other technologies from 2025 through 2050. The cost of solar, for example, is expected to halve again by 2050.
If anything, these drops could be conservative, and I wouldn’t be surprised if some—such as electric cars—get even cheaper.
You can see these cost pathways again but with the historical data included in the charts below. One important takeaway is that the UK CCC expects the electric cars and vans to be cheaper in terms of upfront costs (they’re already cheaper in terms or running and lifetime costs) between 2026 and 2028. That’s why, in the chart below, the “Battery-electric car price premium” goes negative in the later 2020s.
Of course, these cost reductions mean that decarbonising is expected to be much cheaper than we thought, even just five years ago. The UK CCC estimates that the net costs will be 73% cheaper than it thought in 2020 when it published its Sixth Carbon Budget.
As I’ve said before: when it comes to the energy transition if you’re looking at data that’s more than a few years out-of-date, you’re living in a different world.
The chart below shows the additional capital expenditures needed for different parts of the transition. This is compared to a baseline where we don’t step up on climate action. You can see that capital spending for building up our electricity grids and decarbonising buildings is the biggest cost over the next few decades. The additional upfront cost for electric cars and vans — “surface transport” in the chart — is negative because they will soon be cheaper to buy than petrol or diesel. Not only will it save us money in terms of running costs (see the next section), it’ll also save us in upfront costs.
Households will start to save money on their energy bills
It estimates up to £1,400 per year.
Most of these savings will come from electric cars. They are much cheaper to run if a person is charging at home (the savings are more marginal for public charging, especially on rapid chargers). See the chart below.
In order to reap the full economic benefits of decarbonisation and electrification, reform of our energy pricing will be needed. Electricity is currently much more expensive than gas because we put much of our environmental taxes and levies on power rather than fuels. This obviously makes no sense if you want to encourage people to move to the electrified version.
Higher electricity prices are often offset by the fact that electric cars or heat pumps are much more efficient than the fossil fuel alternative (remember that an electric car typically needs 3 to 4 times less energy to move the same distance). But we can make the economics even more attractive if you combine efficiency gains with a more equal electricity-to-gas price ratio.
If you look at the first chart in the previous section, you can see that this electricity-to-gas ratio is currently around four. The UK CCC recommends reducing it to 2 to 3.
The other big challenge for electricity prices currently is that gas sets them most of the time. This is because we have a marginal pricing system, meaning the price is set by the most expensive source that has to be turned on. In the UK, this is nearly always gas.
This should improve over time as we build out our low-carbon power grid (meaning we increasingly have enough renewables and nuclear to cover all of our needs) but people are still feeling the pinch in the near term, and I think this feeds some scepticism that clean energy is actually cheaper. If their bills keep going up while the UK keeps bragging about how much renewable energy it has, you can see why many people might think this (even when that interpretation is not quite right). Addressing these concerns honestly — rather than dismissing them — is crucial to build public trust.
Offshore wind is expected to be the biggest supplier of electricity
Here’s how different clean energy technologies take off in the UK CCC’s model. Offshore, onshore and solar PV all continue to increase significantly. But, offshore wind is expected to be the largest supplier of power. Compare the y-axis labels: it’s expected to have the most capacity installed by 2050. Offshore wind also has a much higher capacity factor than onshore wind and solar PV, so it should be generating much more power.
By 2040, 80% of cars on the road would need to be electric (reaching almost 100% by 2050). That will actually be quite ambitious because even if most new car sales are electric by the end of this decade, lots of people will still have 10- to 15-year-old petrol cars that they’re still hanging on to.
The rollout of heat pumps is incredibly ambitious, especially given our slow progress so far. By 2040, 60% of homes would have a heat pump. Heat pump installers will be incredibly busy in the 2030s, so we should probably get serious about training up a workforce now.
Behaviour change will be…hard
I think a lot of people will brand the UK CCC’s “Balanced Pathway” as being too tech-heavy. I say this because people often call me a “tech optimist” because I think the most promising change in our fight against climate change has been the plummeting cost of solar panels, wind turbines, batteries and electric cars.
If you look at the UK CCC’s pathway, it is almost exactly in line with my outlook. Again, this is not necessarily what the UK CCC authors want to happen. It’s what they think could potentially happen with the right policies and incentives in place. That needs to be grounded in some sense of reality.
The harsh reality is that not many are going to give up their cars. That’s why the UK CCC does not see a drop in the amount of car miles per person (see the first panel below). Nor does it see Brits flying less than they do today; in fact, aviation continues to grow, but at a slower rate than the baseline (because it assumes that prices increase due to fuel taxes, frequent flier levies and other measures).
Meat consumption does decline (I’ve written and talked about the environmental benefits of this a lot), but it is far from eliminated completely. Walking, cycling, and public transport adoption also increase but it’s a far smaller part of the emissions reduction than moving to electric cars.
Here’s another way to look at it, focused on the household level.1
People will have different opinions on this. Some will say it’s trying to be realistic about how much people are willing to change. Others will say we should expect more of our fellow citizens and be more ambitious about behaviour change. I fall into the former camp but can also empathise with the latter.
It rightly acknowledges that these reductions look very different across households. Those that fly more, have a petrol car (or several), eat more meat etc. will have to do more.
The problem is that the CCC's underlying financial assumptions are clearly fantasy. They assume, for example, that offshore windfarms today cost around half of what the audited accounts of windfarms show they *actually* cost. They then assume that costs fall further in the next few decades, despite the fact that they have been rising in recent years.
Most of the CO2 emissions reduction of the UK is due to deindustrialization or increased energy poverty. Pathway to net-zero is a misnomer, unless zero is civilization. Better call it pathway to poverty.