The sky rips open, and within an hour, Dhanmondi is knee-deep—not just in puddles, but in a murky, swirling current that transforms familiar streets into treacherous rivers. The roar of car engines gives way to the slosh of water, and the vibrant life of Dhaka grinds to a halt. Just a few hours of rain, and our cities become aquatic ghost towns. Students, their hopes for exams drowned by the rising tide, stare despondently from waterlogged apartments. Rickshaw-pullers, their livelihoods quite literally afloat, huddle under makeshift shelters. Small businesses—the lifeblood of our communities—watch helplessly as their inventory succumbs to the invasive floodwaters. What happens when the monsoon truly peaks? More critically, what is the actual, agonising state of our drainage systems?

This recurring nightmare is no accident—it is the by-product of Bangladesh’s rapid, unplanned urbanisation, where drainage infrastructure has failed to keep pace with city expansion. In Dhaka, Chattogram, Sylhet, and Barishal, even moderate rain now triggers widespread waterlogging. The roots of this crisis are threefold. First, rampant encroachment on canals, floodplains and wetlands—nature’s own drainage systems—has throttled water flow, turning once-broad channels into clogged trickles. Second, the drainage blueprints still in use were designed decades ago for a different climate and a far smaller population. Today’s intense rainfall and relentless concrete sprawl quickly overwhelm systems built for 25–30 mm per hour, while actual downpours often double that. Third, overlapping mandates among key agencies—WASA, city corporations and RAJUK—have created a maze of fragmented responsibilities. No one is fully accountable, and coordination is virtually absent. This toxic mix of encroachment, outdated design, and bureaucratic disarray turns every rainstorm into a disaster, drowning infrastructure and livelihoods alike.

The relentless urban flooding we witness today is not merely a consequence of poor planning—it is the unmistakable, undeniable face of climate change manifesting as urban chaos. Beyond the widely discussed threats of rising sea levels and coastal erosion, Bangladesh is now grappling with erratic rainfall patterns, sudden cloudbursts, and increasingly extreme weather events that overwhelm city infrastructure within minutes. Our metropolises, already strained by haphazard growth, are now confronting a new, intensified hydrological reality. Yet, despite Bangladesh consistently ranking among the most climate-vulnerable nations on the Global Climate Risk Index, national adaptation discourse remains disproportionately focused on rural resilience and coastal defences. Urban centres—dense with population and economic assets—remain dangerously under-prioritised. This blind spot in planning and policy is no longer just an oversight; it is a critical vulnerability that leaves millions exposed to cascading climate risks. Recognising the urban flood crisis as part of the climate emergency is not optional—it is long overdue.

If climate change is the accelerant, then poor governance is the kindling. Beneath the rising waters lies a tangle of institutional dysfunction and impunity that sabotages effective action. When Dhaka North goes underwater, blame ricochets from WASA to the City Corporation to RAJUK—yet no agency is held accountable. This bureaucratic merry-go-round ensures that drainage failures are met not with reform, but with finger-pointing. Despite ballooning budgets for drain cleaning and flood prevention, there is little transparency about where the money goes—and even less public trust in how it is spent. Meanwhile, unregulated construction continues to encroach on canals, wetlands and stormwater routes with near-total impunity. Developers routinely fill up vital water bodies, and legal enforcement is either toothless or non-existent. This systematic erasure of natural drainage not only worsens flooding—it cements it as a feature, not a flaw, of urban life. Until we fix who governs water, we will continue drowning in the consequences.

The grim reality demands not just recognition of the problem, but a swift and transformative shift towards comprehensive solutions. Crucially, this involves embracing nature-based solutions that work with, rather than against, our natural hydrology. This means aggressively reviving and restoring our choked canals, turning them back into functioning arteries for water flow instead of stagnant waste receptacles. Furthermore, we must actively pursue the creation of urban retention ponds and expand green spaces that can absorb excess rainfall, acting as vital sponges during deluges. Innovations such as green roofing and permeable pavements must become standard practice in urban development, allowing water to infiltrate the ground naturally rather than overwhelm drainage systems.

We do not need to reinvent the wheel; successful models exist globally. Singapore’s ABC Waters Programme—which integrates water bodies into the urban landscape for both drainage and recreation—offers a powerful blueprint. What Bangladesh desperately needs is a Drainage Master Plan 2.0: a forward-looking strategy that not only updates archaic designs but fundamentally integrates the latest climate data and rigorously enforces wetland zoning laws. This cannot be a top-down directive. It requires active, regular dialogue and collaboration among urban planners, climate scientists, engineers and local communities—the very people who live and breathe these challenges. Only by working together can we design and implement a resilient drainage system capable of facing the climate realities of tomorrow.

The choice before us is stark. If we fail to fix our urban drainage systems now, the floods of the future will not merely damage property and disrupt daily life—they will systematically drown opportunity. They will wash away the entrepreneurial spirit of our small businesses and stifle economic growth. They will erode public health, fostering outbreaks of waterborne diseases. Most tragically, they will extinguish hope, leaving our citizens trapped in a cycle of despair and vulnerability. The time for action is not tomorrow, but today. Our collective future, and the very liveability of our cities, depends on it.

Nahian Rahman is research associate at Bangladesh Institute of Governance and Management (BIGM).

Views expressed in this article are the author’s own.

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Chancellor Rachel Reeves has unveiled the contents of the UK’s first multi-year spending review since 2021.

The review sets the day-to-day budgets of government departments over the next three years, used to pay staff and deliver public services.

It also sets their investment budgets until the end of the decade, to pay for new infrastructure such as hospitals, schools, and military kit.

Here is a summary of the key points.

In summary Gov. Gavin Newsom wants to extend California’s landmark cap and trade program through 2045. But earmarking half of this year’s funds to the beleaguered rail project and Cal Fire would leave too little for other climate projects, critics say.

California Gov. Gavin Newsom wants to tap at least $2.5 billion from the state’s climate fund to pay for state firefighting crews and the long-troubled high-speed rail project.

In his budget proposal unveiled last week, Newsom announced that he is seeking to extend the state’s landmark cap and trade program, which is funded by credits bought and sold by major polluters, through 2045. But the allocation of the money is already triggering a fervent debate among state lawmakers.

Large polluters, such as oil refineries and power plants, pay for their greenhouse gases through a market system of auctioned credits called cap and trade. Over the past 11 years, almost $13 billion from cap and trade auctions has already been spent on electric vehicles, public transit, clean energy and other projects to reduce greenhouse gases and adapt to climate change.

The governor’s new plan would commit $1.54 billion of the 2025-26 climate funds, and more in later years, to pay for Cal Fire’s “fire prevention, fire control, and resource management activities.” That would amount to more than a third of the state fire agency’s $4.47 billion budget, according to the governor’s proposed budget. Wildfires have grown more extreme because of climate change, straining Cal Fire’s resources.

In addition, through 2045, the governor’s plan would earmark at least $1 billion a year of the climate funds to the California high-speed rail project, which aims to connect Los Angeles to San Francisco. The project, which has been beset with construction delays, cost overruns and fights about the route for years, received $1 billion from cap and trade auctions in 2024, and more than $7 billion over the past decade.

Combined, the firefighting and high speed rail costs could consume more than half of the projected $4.8 billion that cap and trade would provide in the next fiscal year.

Newsom’s proposal to extend California’s cap-and-trade program, which expires in 2030, for 15 more years could spark one of the year’s most consequential fights in the Legislature over climate change.

The push to extend the program is bound to be contentious, particularly if Newsom seeks a two-thirds vote of the Legislature, as various groups jostle for a slice of the funding. Watchdogs, policy analysts and environmental justice advocates also have raised concerns about how the program is structured and who benefits the most.

Many legislators have already expressed concerns about the use of climate funds to pay for firefighters and high speed rail. Some lawmakers and other critics and analysts say diverting the money would mean cutting other priorities, such as the transition to electric vehicles.

“You’re going to have some tough choices,” said Helen Kerstein, who tracks the cap and trade program for the nonpartisan Legislative Analyst’s Office. “You can’t add $1.5 billion — and growing — and not take anything away, at least in the near term, given current projections.”

“You’re going to have some tough choices. You can’t add $1.5 billion — and growing — and not take anything away, at least in the near term.” HELEN KERSTEIN, LEGISLATIVE ANALYST’S OFFICE

Assemblymember Lori Wilson, a Democrat from Suisun City, said she is concerned that using climate fund money to pay for Cal Fire’s activities could crowd out spending that has already been promised to reduce emissions from cars and trucks and fund mass transit.

Transportation “is the largest single source, but the hardest to decarbonize,” Wilson said. “And the whole point is to transition, which is why those investments (are) necessary.”

A coalition of environmental justice groups said the governor, by using so much money for high speed rail and general fund expenses, is leaving inadequate money “for extreme heat impacts, affordable housing, clean drinking water, and other critical environmental programs that reduce greenhouse gasses and clean up contaminated air, water and soil that pose direct threats to public health.”

A firefighter battles the Eaton Fire in Altadena on Jan. 8, 2025. Photo by Ethan Swope, AP Photo

The cap and trade proposal came as California faces a $12 billion budget deficit. By proposing the cap and trade extension as an addition to the budget bill, which moves through the legislative process faster than standalone bills — Newsom could sidestep what might otherwise be a longer, more contentious climate debate.

The move links the reauthorization of the program to broader budget negotiations — boosting the governor’s leverage but reducing legislative oversight and public input.

Assemblymember Cottie Petrie-Norris, a Democrat from Irvine, protested the governor’s moves at a committee meeting on Thursday.

“This is probably the most challenging budget situation the state of California has faced in at least the last seventeen years. We are going to be grappling with some very, very tough choices, very tough decisions,” she said. “Trying to then layer in, and shoehorn in, the reauthorization of our landmark climate cap and trade — cap and invest — program seems kind of insane to me.”

Newsom’s proposed extension of the program — which he wants to rename “cap and invest” — comes after President Donald Trump attacked it in an executive order targeting blue-state climate initiatives. The order singled out California’s cap and trade program as forcing businesses to meet “radical requirements.”

Newsom framed his cap and trade proposal in the resistance language reminiscent of clashes during the first Trump era. “California won’t bend the knee to a federal administration hellbent on making America polluted again,” Newsom said in a statement.

But some state lawmakers are already questioning key parts of the plan. Assemblymember Steve Bennett, a Democrat from Oxnard, questioned during the hearing Thursday whether revenues from cap and trade could realistically cover all of Newsom’s promises.

“So, in a sense you’re proposing more money than we’re saying we have?” Bennett, chair of the committee, asked Newsom administration officials from the state Department of Finance.

Bennett was also openly skeptical of continuing to use cap and trade money to pay for the high-speed rail project, which has ballooned to a cost of $128 billion. “We need to… make sure we don’t have a train to nowhere,” he said.

Through 2030, 25% of all cap and trade money is earmarked for high speed rail under state law. A bill in the Assembly authored by a Republican that would eliminate that earmark has not moved forward.

“Real tracks are being laid…so I want to get (high speed rail) done. That’s our commitment. That’s why it’s still reflected in the cap and trade extension.” GOV. GAVIN NEWSOM

Newsom said at his budget briefing Wednesday that his “commitment (to high speed rail) is firm.”

“Real tracks are being laid…so I want to get it done,” Newsom said. “That’s our commitment. That’s why it’s still reflected in the cap and trade extension.”

Several other lawmakers also raised concerns about the governor’s budget math and were skeptical of relying on a funding stream that is supposed to shrink over time as California reduces its carbon emissions.

“Trying to…shoehorn in the reauthorization of our landmark climate cap and trade program (in budget negotiations) seems kind of insane to me.” ASSEMBLYMEMBER COTTIE PETRIE-NORRIS

California Transit Association Executive Director Michael Pimentel said the governor’s plan was “silent on the importance of continued climate investment” into mass transit.

“To combat climate change, improve air quality, and address the affordability crisis faced by everyday Californians, state leaders must stand up to protect and maintain continued investment in clean, efficient, and affordable public transit projects and services,” he said.

A contentious history

California launched its cap-and-trade program in 2013 as a key tool for slashing greenhouse gas emissions. Created under the 2006 Global Warming Solutions Act, the system set a declining cap on emissions from major polluters and allowed businesses to buy and sell permits, creating a market for emissions.

By 2017, then-Gov. Jerry Brown faced a critical inflection point. The program was set to expire in 2020, and Brown sought to extend it through 2030. But the path to reauthorization was anything but smooth.

The political lift came in securing a two-thirds vote in the Legislature, the threshold that would help inoculate the program from legal attacks, given that California voters expanded the definition of a tax in 2010.

That supermajority required bipartisan support, and Brown courted moderate Republicans with concessions: tax breaks for manufacturers, fee waivers for rural residents and spending assurances.

Newsom’s proposal would maintain many of the program’s most controversial provisions. Those include free emission permits for the oil and gas industry, a price ceiling mechanism and the use of carbon offsets, which have drawn criticism over concerns about their effectiveness. The governor’s proposal leaves most of the details up to the discretion of the Air Resources Board, which oversees the cap and trade program.

One key issue is the number of free allowances to industry, including the oil and gas industry. Newsom’s proposal could extend many of those giveaways through 2045, said climate expert Danny Cullenward, vice chair of an independent advisory cap and trade committee.

Cullenward told CalMatters that the market will likely begin shifting from a surplus of pollution permits to a scarcity. That will raise emissions reductions and state revenue, but also potentially increase consumer costs, with key decisions left to the Air Resources Board.

“It’ll bring in more money to the state, but it’ll also have higher consumer price impacts,” Cullenward said. “That’s going to be a key issue.”

The cap and trade debate is unfolding amid growing concern over affordability in California — a theme running through nearly every aspect of the state’s climate policy. A new report from the Legislative Analyst’s Office raised questions about how much the program could cost Californians. For instance, the cap and trade program could add 74 cents to the cost of gasoline if credits rise to their highest levels, amounting to about an additional $700 a year for the average California household, the report said.

Of the $12.8 billion spent so far, nearly $9.2 billion has been invested in projects that benefit disadvantaged communities that are designated as a priority, according to the air board.

The cap and trade debate is unfolding amid growing concern over affordability in California — a theme running through nearly every aspect of the state’s climate policy.

But environmental justice advocates have long criticized the program for failing to reduce local pollution in those communities, which often bear the cost of higher gasoline prices, too. Because cap and trade allows companies to comply with greenhouse gas limits by buying credits, they can continue operating in low-income neighborhoods without reducing emissions there.

Advocacy groups have asked the Legislature to reject a plan similar to the governor’s that would largely leave the program unchanged.

“Our communities, who bear the disproportionate burden of some of the worst air quality in the state, and the nation, are also predominantly communities of color,” Connie Cho, senior policy advisor for the Asian Pacific Environmental Network, said at a state Senate hearing earlier this month.

“We believe it is not only possible, but absolutely necessary, to achieve and balance all three: climate, health equity and affordability through the cap and trade program as the cost of living rises to a fever pitch.”

This article was updated on May 19 to clarify the cap and trade funds that high speed rail has received..

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Several key Western European countries including the UK, Switzerland, Germany, France and the Netherlands have slashed their aid budgets considerably in the last few months.

This trend comes amid escalating geopolitical tensions and global economic uncertainty, as countries choose to focus more on their own needs, such as increasing defence spending and domestic government stimulus measures.

Foreign aid is mainly measured through Official Development Assistance (ODA), which wealthier nations offer developing countries. The Organisation of Economic Cooperation and Development recommends that donor nations try to allocate at least 0.7 per cent of their Gross National Income (GNI) to foreign aid.

Belgium has revealed that it will be cutting its aid funding by 25 per cent over five years, while the Netherlands has reducedit by 30 per cent and France by 37 per cent.

These budget trims could have potentially devastating consequences for vulnerable countries which rely heavily on foreign financial aid, such as Tanzania, Bangladesh and Zambia.

The aid cuts could also derail the climate finance goals developed countries pledged to meet at COP29 back in November 2024.

Why are so many European countries cutting aid budgets?

Political changes, such as far right parties coming into power in Finland and Sweden, have heavily influenced aid cuts. European conflicts such as the Russia-Ukraine war and the threat of an escalating trade war with the US have also led to nations prioritising defence spending over aid money.

The UK’s prime minister Keir Starmer announced in February that aid levels would be slashed from the current 0.5 per cent of GNI to a historically low 0.3 per cent of GNI by 2027.

The country has been systematically reducing aid funding in the last few years, due to a lagging post-Brexit economy and the economic impact of the pandemic. Defence spending will be hiked to 2.5 per cent of GDP from April 2027.

Similarly, Francehas been shaving aid financing while dealing with a record deficit and ongoing political turmoil. The government has also been facing far-right allegations that development aid is wasting taxpayer money.

The Netherlands has also made aid cuts in order to focus more on national interests, and will integrate development aid more closely with Dutch trade, economic and migration policies.

This means that the country will now channel its aid money only into ventures which benefit it the most, such as food security, water management and child and maternal healthcare.

Finland has adopted a similar stance of providing aid to only those causes which benefit Finnish interests the most, whereas Sweden is focusing more on defence, policing and welfare services.

But experts have pointed out the dangers of losing sight of the systemic, global nature of climate change, in favour of domestic issues.

“Climate-induced disasters don’t respect borders,” says Carsten Brinkschulte, CEO and founder of Dryad Networks, a tech company that tackles wildfires.

“Cutting aid, particularly funding that supports climate adaptation and resilience, is not just short-sighted but also economically unsound. Preventative investment in vulnerable regions is significantly cheaper than managing the fallout of unmanaged climate risk,” he says.

What does this mean for climate finance goals set at COP29?

At COP29, developed countries agreed to provide at least $300 billion (€277.8bn) in climate finance yearly to developing countries by 2035. This is triple the previous $100bn (€92.6bn) target, with an overall goal of at least $1.3 trillion (€1.2tn) raised by 2035.

However, the recent European aid cuts might make it much harder for Western and Northern European countries to meet this ambitious target.

In theory, developed countries are supposed to maintain separate budgets for development aid and climate finance. This means that climate finance should be provided on top of, and not instead of, normal development aid.

Some things contributing to the difficulty of maintaining separate budgets include an overlap in goals, such as several development projects also having climate benefits. Limited resources and a lack of definitions also add to this issue.

Some countries using one fund for both tend to earmark money for climate projects and broader development goals, to create some distinction.

Many countries also meet their climate finance goals by re-labelling existing development aid as climate finance, instead of providing new funds like they should. In 2022, $27bn (€25.1bn) of the $94.2bn (€87.4bn) annual hike in public climate funds was procured from existing development aid.

New Zealand and Luxembourg are among the few developed countries which clearly separate climate finance and development aid.

Related Arctic winter ends with lowest sea ice cover in recorded history

“The COP’s climate finance goals WILL be affected, but it’s not yet clear by how much. The UK and Sweden have said they remain committed to their climate finance goals.” Sarah Hearn OBE, former UK aid official, tells Euronews Green.

“The Netherlands announced it will reduce climate finance in 2025 as part of its “Netherlands” first approach to aid, and Switzerland has already cut some climate finance. France is reviewing its aid and where its cuts should be made. So the picture is bleak for COP advocates,” she says.

Germany had cut its climate finance to €5.7bn in 2023. However, it pledged to be the biggest climate finance donor at COP29, providing €60m to the Adaptation Fund.

Thanos Verousis, professor of sustainable finance at Vlerick Business School, had a more optimistic view about EU climate finance goals.

“In countries where climate change is still secondary to political priorities, we might see significant deviations from COP commitments. Conversely, in regions like the EU, where climate change remains a top priority, climate finance commitments are likely to stay prominent on the agenda,” he says.

How could smaller European aid budgets impact vulnerable countries?

European development aid helps numerous vulnerable regions and countries all over the world. These funds go towards economic stabilisation, development projects, health programmes, economic and poverty relief, climate change and humanitarian causes, among others.

“Many countries in the Global South face the dual challenges of poverty and climate vulnerability. For them, climate finance is crucial not just for mitigation but also for adaptation,” says Verousis.

“Without adequate protections, cuts to foreign aid will undermine efforts to build climate resilience – such as disaster preparedness, agricultural reforms, and renewable energy initiatives. These reductions will leave these countries even more exposed to economic and environmental shocks, amplifying the risks of both climate change and underdevelopment.”

Niki Ignatiou, head of Women, Peace, and Security at ActionAid UK, pointed out that cutting aid budgets would contribute to worsening human rights crises in some countries.

“Redirecting ODA away from crisis-affected communities to fund further conflict isn’t just morally wrong – it also undermines global stability and the UK’s commitments to human rights and gender justice,” she says.

“The UK Foreign Secretary has acknowledged that the climate crisis is fuelling conflict and displacement – yet slashing ODA to the world’s most climate-impacted communities will only deepen the injustices most acutely felt by women and girls. This decision must be reversed before it causes irreparable harm,” she adds.

Lower aid also means that vulnerable countries lose significant access to key climate tech tools, often vital for them to battle natural disasters.

“These regions are often hit hard by climate events, facing wildfires, floods, droughts, and deforestation. Reducing aid removes access to critical tech innovation and services that can strengthen local climate resilience,” comments Brinkschulte.

“This risks creating a dangerous loop: more climate shocks, more displacement, more economic instability, and greater long-term aid needs. Prevention is the only sustainable strategy.”

How could countries avoid cutting aid?

Instead of cutting foreign aid ruthlessly, several experts advocate for European nations to redirect aid to areas where it is most needed, or treat it as an investment in vulnerable countries and climate change efforts.

Verousis says, “Instead of cutting aid, a more flexible solution could be to reprioritise the allocation of foreign aid. Governments could focus on increasing efficiency, targeting aid more effectively, and leveraging the support of international organisations and development banks.

“This approach would allow for more strategic use of limited resources, while still addressing global needs.”

Looking at aid as investment, instead of donations, could also help reframe European outlooks towards climate finance.

“Reframing aid as investment is one option,” says Brinkschulte. “A euro spent on climate resilience now saves several euros in emergency response, insurance payouts, and migration costs later. Moreover, redirecting subsidies from fossil fuels – still vast in many nations – could generate funding without increasing budget strain.”

Presented to the Secretary of State pursuant to Section 34 of the Climate Change Act 2008.

Footnotes have been removed from the HTML version of this report. For the footnoted version of this report, please download the PDF.

Acknowledgements

The Committee would like to thank:

The team that prepared this report and its analysis. This was led by Emma Pinchbeck, James Richardson, Emily Nurse, and Eoin Devane, and included Sasha Abraham, Rose Armitage, Florence Bates, Simona Battipaglia, Owen Bellamy, George Blake, Sandra Bogelein, Marili Boufounou, Marta Calore, Christian Calvillo Munoz, Rachel Carr-Whitworth, Lidice Cruz-Rodriguez, Selina Dagless, Bianca de Farias Letti, Victoria de la Cruz, Ramesh Deonarine, Joshua Deru, Tom Dooks, Caitlin Douglas, Kim Dowsett, Kieron Driscoll, Ahmed Gailani, Francesco Maria Giacomini, Ruth Gregg, Esther Harris, Cara Hawkins, Rachel Hay, Cilla Hellgren, Robbie Herring, Gemma Holmes, Daisy Jameson, Ariana Jessa, Luke Jones, Sam Karslake, Emma Kearney, Miriam Kennedy, Michael Lord, Grace Macready, Luke Maxfield, Moryse McInniss, Aaron McMahon, Richard Millar, Bea Natzler, Chloe Nemo, Chris Parker, Finna Parkinson, Emma Patterson, Lois Player, Simon Rayner, Andrew Romang, Elena Saggioro, Miranda Schroder, Viv Scott, Penny Seera, Olivia Shears, Marcus Shepheard, Bryony Sheridan, Joris Simaitis, Thomas Smith, Rachael Steller, James Tarlton, Felicity Taylor, Seán Taylor, Indra Thillainathan, Sam Van Stroud, Emma Vause, Sophie Vipond, Zelna Weich, Chloe Welsh, Eveline White, Hannah Williams, Kate Williamson, Louis Worthington, Charley Wright, Ken Wright, and Susie Wright.

Our previous Committee member, Professor Michael Davies.

Our expert advisor on the role of households and the public in the Net Zero transition, Professor Rebecca Willis.

Organisations and individuals who carried out research or chaired advisory groups to support this advice. These included AFRY, Arup, the Association for Decentralised Energy, Tim Benton (formerly Chatham House), Hannah Bloomfield (Newcastle University), the Centre for Climate Change and Social Transformation, City Science, CO₂RE, the Energy Demand Research Centre, ERM, Eunomia, Frontier Economics, the Good Food Institute, Shevaun Haviland (British Chambers of Commerce), the Industrial Decarbonisation Research and Innovation Centre, Ipsos, the John Innes Centre, Ceris Jones (National Farmers Union), the Just Transition Commission, Kamma, Lancaster University, the London School of Hygiene and Tropical Medicine, the National Farmers Union, the National Physical Laboratory, Octopus Energy, PricewaterhouseCoopers, Dave Reay (University of Edinburgh), Ricardo, Rothamsted Research, Sciencewise, the Scottish Rural College, SYSTRA, the UK Centre for Ecology and Hydrology, University College London, the University of Aberdeen, the University of East Anglia, URSUS, and WSP.

The citizens who participated in our citizens’ panel and the experts who participated in our advisory groups.

A wide range of organisations and individuals who participated in workshops, engaged with us, submitted evidence, or met with the Committee bilaterally.

Executive summary

The climate is changing. Greenhouse gas levels in the atmosphere are outside the range that our species has ever previously experienced. Heatwaves and floods have become regular fixtures instead of ‘once in a lifetime’ events for many around the world, including in the UK. Global warming has unequivocally been caused by greenhouse gas emissions, with 100% of the observed long-term temperature change attributable to human causes.

The UK’s Climate Change Act (2008) sets the framework for domestic action to address climate change mitigation and adaptation. The Act requires the Government to propose regular, legally binding milestones on the way to achieving Net Zero greenhouse gas emissions, known as carbon budgets. The Committee is required to advise the Government on the level of these. Parliament must then agree each carbon budget for it to be set into law. Investors, businesses, households, and government can then act with a shared understanding of the path as well as the end goal.

Our recommended level for the Seventh Carbon Budget, a limit on the UK’s greenhouse gas emissions over the five-year period 2038 to 2042, is 535 MtCO 2 e, including emissions from international aviation and shipping.

This would be an ambitious target, reflecting the importance of the task. But it is deliverable, provided action is taken rapidly. Our advice is based on the latest technological, social, and economic evidence; extensive sector modelling; engagement with stakeholders including businesses, trade unions, and farmers; and a citizens’ panel testing what would make changes accessible and affordable to households.

In many key areas, the best way forward is now clear. Electrification and low-carbon electricity supply make up the largest share of emissions reductions in our pathway, 60% by 2040. Once the market has locked into a decarbonisation solution, it needs to be delivered. The roll-out rates required for the uptake of electric vehicles (EVs), heat pumps, and renewables are similar to those previously achieved for mass-market roll-outs of mobile phones, refrigerators, and internet connections.

The private sector has a proven record of innovating and delivering rapid transitions in technologies and consumer choices, provided the right incentives are in place. As technologies such as renewable electricity and EVs become cheaper than fossil fuel-based alternatives, global markets for many of the technologies needed to decarbonise economies are growing.

Alongside markets, policy is needed to provide confidence to investors and consumers; manage risks in new markets; remove barriers to delivery; and offer financial incentives where necessary. Policy should include clear long-term signals and decisive choices to narrow options as it becomes increasingly clear which technologies markets are locking into.

The UK must also step up actions to adapt to the climate change that is already happening. The investments, infrastructure, and land use changes required to deliver the Seventh Carbon Budget must be designed to be well-adapted to current and future climate change.

We estimate that the net costs of Net Zero will be around 0.2% of UK GDP per year on average in our pathway, with investment upfront leading to net savings during the Seventh Carbon Budget period. Much of this investment is expected to come from the private sector.

Net Zero will increase economic security against fossil fuel price shocks, which have caused around half of the UK’s recessions since 1970. There are also opportunities for new jobs in areas such as heat pump installation, and growing markets such as green finance. Clean, efficient, electric technologies will mean reduced air pollution and should mean lower energy bills than continued reliance on fossil fuel technologies.

Large parts of the UK’s service-based economy will see little impact, but for some, for example in oil and gas and some parts of farming, there will be significant change. Government needs to engage with affected communities to develop proactive, funded plans to support those affected.

Targets support actions, but targets alone are not enough. This report therefore sets out our recommendations for how to hit the proposed Seventh Carbon Budget. We set out a pathway, and associated actions, and have considered economic and social factors to ensure our advice is practical.

The UK’s Balanced Pathway

The UK has committed to reach Net Zero greenhouse gas emissions by 2050, with any residual greenhouse gas emissions balanced by removals. Our advice on the level of the Seventh Carbon Budget is based on our Balanced Pathway: an emissions reduction pathway from 2025 to Net Zero by 2050 (Figure 1). Our pathway is in line with all of the UK’s legislated carbon budgets and stated Nationally Determined Contributions (NDCs). It achieves the recommended Seventh Carbon Budget via domestic action, without resorting to international credits.

Emissions in the UK in 2023 were around half the levels they were in 1990. The pace of emissions reduction has more than doubled since the introduction of carbon budgets in 2008, driven by the phase-out of coal and the ramp-up of renewable electricity generation. By the middle of the Seventh Carbon Budget, on our pathway, emissions in the UK will be only a quarter of the level they are today, and 87% lower than levels in 1990 (90% lower excluding emissions from international aviation and shipping). Achieving this will require a significant reduction in emissions across sectors including surface transport, buildings, industry, and agriculture (Figure 2).

Five routes

The Seventh Carbon Budget is delivered through: electricity, low-carbon fuels and carbon capture and storage (CCS), nature, engineered removals, and demand. Many of the solutions are available today and could be rapidly deployed, provided the right incentives are put in place. Other solutions, particularly within low-carbon fuels and engineered removals, are less certain and industry and government should continue to pursue multiple options for now.

1. Electricity

UK-based renewable energy provides the bulk of generation in a larger, future electricity system. Electricity then replaces oil and gas across most of the economy, including EVs, buildings, and much of industry. This requires twice as much electricity as today by 2040. As well as being low carbon, electric technologies are highly efficient. Ending the combustion of fossil fuels in boilers and cars leads to cleaner air in homes and neighbourhoods.

Low-carbon supply : by 2040, our Balanced Pathway sees offshore wind grow six-fold from 15 GW of capacity in 2023 to 88 GW by 2040. Onshore wind capacity doubles to 32 GW by 2040 and solar capacity increases to 82 GW. Alongside renewables, storable forms of energy including nuclear, low-carbon dispatchable generation (either gas CCS or hydrogen), and batteries, as well as interconnection to neighbouring markets, ensure a reliable supply of electricity even in adverse weather years. These technologies need to be accompanied by rapidly expanding the transmission grid, upgrading the distribution network, and speeding up the grid connection process.

: by 2040, our Balanced Pathway sees offshore wind grow six-fold from 15 GW of capacity in 2023 to 88 GW by 2040. Onshore wind capacity doubles to 32 GW by 2040 and solar capacity increases to 82 GW. Alongside renewables, storable forms of energy including nuclear, low-carbon dispatchable generation (either gas CCS or hydrogen), and batteries, as well as interconnection to neighbouring markets, ensure a reliable supply of electricity even in adverse weather years. These technologies need to be accompanied by rapidly expanding the transmission grid, upgrading the distribution network, and speeding up the grid connection process. EVs : by 2040, our Balanced Pathway sees three-quarters of cars and vans and nearly two-thirds of heavy goods vehicles (HGVs) on the road being electric, up from only 2.8% of cars and 1.4% of vans in 2023. The share of new car and van sales that are electric grows quickly, ahead of the zero-emission vehicle mandate, reaching around 95% by 2030 and 100% by 2035. This is propelled by the falling cost of batteries, which allows electric cars to reach price parity with comparable petrol and diesel cars between 2026 and 2028. Our pathway assumes battery-electric vehicles are chosen to decarbonise all HGVs.

: by 2040, our Balanced Pathway sees three-quarters of cars and vans and nearly two-thirds of heavy goods vehicles (HGVs) on the road being electric, up from only 2.8% of cars and 1.4% of vans in 2023. The share of new car and van sales that are electric grows quickly, ahead of the zero-emission vehicle mandate, reaching around 95% by 2030 and 100% by 2035. This is propelled by the falling cost of batteries, which allows electric cars to reach price parity with comparable petrol and diesel cars between 2026 and 2028. Our pathway assumes battery-electric vehicles are chosen to decarbonise all HGVs. Heat pumps: by 2040, our Balanced Pathway sees around half of homes in the UK heated using a heat pump, compared to around 1% in 2023. This requires the annual rate of heat pump installations in existing residential properties to rise from 60,000 in 2023 to nearly 450,000 by 2030 and around 1.5 million by 2035, a rate of increase in line with that seen in other European countries such as Ireland and the Netherlands. But installation rates do not exceed natural replacement cycles; heating systems are only replaced at the end of their life. All new and replacement heating systems become low carbon after 2035 to ensure a fully decarbonised housing stock by 2050.

by 2040, our Balanced Pathway sees around half of homes in the UK heated using a heat pump, compared to around 1% in 2023. This requires the annual rate of heat pump installations in existing residential properties to rise from 60,000 in 2023 to nearly 450,000 by 2030 and around 1.5 million by 2035, a rate of increase in line with that seen in other European countries such as Ireland and the Netherlands. But installation rates do not exceed natural replacement cycles; heating systems are only replaced at the end of their life. All new and replacement heating systems become low carbon after 2035 to ensure a fully decarbonised housing stock by 2050. Industrial electrification: by 2040, our Balanced Pathway sees electricity meet 61% of industrial energy demand, up from around 26% today. The major sources of heat in industry are replaced with electric options including electric boilers, electric ovens, electric furnaces in the glass sector, and, most significantly, electric heat pumps. Electrifying industry allows UK manufacturers to benefit from global demand for low-carbon goods.

2. Low-carbon fuels and CCS

A range of low-carbon fuels contribute to the pathway in areas that are less suited to electrification. While they are less efficient than electric technologies, these fuels play a key role in aviation and shipping as well as some roles in industry. Low-carbon fuels are produced from a range of sources, including hydrogen produced from electrolysis or by methane reformation with CCS; synthetic fuels that use carbon captured from the atmosphere combined with hydrogen to produce a low-carbon fuel with similar properties to today’s fossil fuels; and biofuels. Bioenergy supply is constrained by the availability of sustainable sources, so is reserved for areas with the highest carbon abatement potential. CCS allows continued use of fossil fuels in limited circumstances, but plays a key role in capturing process emissions, as well as contributing to electricity generation, hydrogen production, and engineered removals.

Sustainable aviation fuel (SAF) and shipping fuels : by 2040, our Balanced Pathway sees SAF meet 17% of aviation fuel demand, providing an alternative to kerosene in planes. SAF is a mix of biofuel and domestically produced synthetic fuel. We assume that the aviation sector bears the costs of meeting Net Zero for flying and makes use of both SAF and engineered removals. By 2040, our Balanced Pathway sees ammonia meet 22% of shipping energy use and synthetic fuels meet a further 17% of shipping energy use, predominantly from synthetic methanol. These technologies are at an early stage of development and the balance between SAF, removals, and demand in aviation, and between ammonia and methanol in shipping, remains unclear.

: by 2040, our Balanced Pathway sees SAF meet 17% of aviation fuel demand, providing an alternative to kerosene in planes. SAF is a mix of biofuel and domestically produced synthetic fuel. We assume that the aviation sector bears the costs of meeting Net Zero for flying and makes use of both SAF and engineered removals. By 2040, our Balanced Pathway sees ammonia meet 22% of shipping energy use and synthetic fuels meet a further 17% of shipping energy use, predominantly from synthetic methanol. These technologies are at an early stage of development and the balance between SAF, removals, and demand in aviation, and between ammonia and methanol in shipping, remains unclear. Hydrogen : by 2040, our Balanced Pathway sees hydrogen play a small but important role, particularly in industrial sectors such as ceramics and chemical production which may find it hard to electrify. Hydrogen also has an important role within the electricity supply sector as a source of long-term storable energy that can be dispatched when needed and as a feedstock for synthetic fuels. However, we see no role for hydrogen in buildings heating and only a very niche, if any, role in surface transport.

: by 2040, our Balanced Pathway sees hydrogen play a small but important role, particularly in industrial sectors such as ceramics and chemical production which may find it hard to electrify. Hydrogen also has an important role within the electricity supply sector as a source of long-term storable energy that can be dispatched when needed and as a feedstock for synthetic fuels. However, we see no role for hydrogen in buildings heating and only a very niche, if any, role in surface transport. CCS: by 2040, our Balanced Pathway sees CCS used in industrial subsectors with process emissions for which alternatives are unlikely to be available. This results in CCS being deployed in the chemicals and cement and lime industries. CCS is also used, alongside hydrogen, to enable long-term storable, dispatchable power in the electricity supply sector, in manufacturing low-carbon hydrogen, and to underpin engineered removals. Achieving the CCS trajectory in our industry pathway relies on the establishment of CO 2 storage and rapid construction of pipelines to connect sites. While its role is limited to sectors where there are few, or no, alternatives, we cannot see a route to Net Zero that does not include CCS.

3. Nature

Nature-based measures, including planting new woodland and restoring peatlands, are integral in growing land-based carbon sequestration. They provide opportunities for farmers to diversify their income streams away from livestock farming, as do income from renewables and energy crops. Appropriately sited, sustainable UK bioenergy supply provides emissions savings in engineered removals. The net carbon benefits retained on site in vegetation and soils are counted within nature. By 2050, nature-based sequestration offsets the residual emissions from the agriculture and land use sectors.

New woodland creation: by 2040, our Balanced Pathway sees more than 16% of the UK covered in woodland, an increase from 13% today, as new diverse woodlands deliver carbon sequestration in vegetation and soils. It is vital that tree planting rates more than double to 37,000 hectares per year, by 2030.

by 2040, our Balanced Pathway sees more than 16% of the UK covered in woodland, an increase from 13% today, as new diverse woodlands deliver carbon sequestration in vegetation and soils. It is vital that tree planting rates more than double to 37,000 hectares per year, by 2030. Peatland restoration: by 2040, our Balanced Pathway sees the proportion of UK peatlands in natural or rewetted conditions rise from 26% in 2023 to 55%. Most of this scale-up needs to take place this decade. This measure delivers over half the land use emissions reductions by 2040.

4. Engineered removals

Removals are needed to balance residual emissions, principally from aviation. By 2040, both bioenergy with CCS and direct air capture are deployed. There are also small amounts of removals from enhanced weathering and biochar. Delivering removals will require CO 2 transport and storage infrastructure to be developed in good time, alongside finalising business models and setting out a common sustainability framework for biomass.

5. Demand

The deployment of low-carbon technologies needs to be done in parallel with a shift away from high-carbon goods and services. This is particularly true where no major lower-carbon technology exists or where these shifts are required to reduce emissions in the near term due to technologies taking longer to develop. Our assumptions here are informed by evidence on what is deliverable, as well as by the views of our citizens’ panel on what needs to be done to make changes accessible and affordable. Key areas include:

Increased efficiency: by 2040, our Balanced Pathway sees cost effective resource and/or energy efficiency measures deployed across most sectors. This includes home insulation, more efficient use of resources in industry, reductions in commercial, household, and food waste, and more efficient technologies in aviation and shipping.

by 2040, our Balanced Pathway sees cost effective resource and/or energy efficiency measures deployed across most sectors. This includes home insulation, more efficient use of resources in industry, reductions in commercial, household, and food waste, and more efficient technologies in aviation and shipping. Low-carbon choices: by 2040, our Balanced Pathway sees people make some shifts towards lower-carbon choices. Better infrastructure enables more people to choose public transport, cycling, or walking, instead of driving, bringing the UK closer in line with countries such as Germany, Switzerland, and the Netherlands. A continuation of existing trends, together with greater choice and availability of plant-based foods, sees a reduction in meat (especially beef and lamb) and dairy consumption, within overall healthier diets. With the aviation sector bearing the costs of meeting Net Zero for flying, demand growth is lower than in the baseline of no further decarbonisation action.

The path to Net Zero has become clearer in many areas. However, substantial uncertainty inevitably remains around aspects of a pathway modelled over a 25-year time horizon. We have undertaken an assessment allowing us to identify key sources of uncertainty, understand their potential impact, and consider options to address deviations from the pathway. The largest uncertainty impact in 2040 comes from the sum of uncertainties around costs.

Development of contingency options by government would ensure a robust and adaptive approach to achieving Net Zero. For the Seventh Carbon Budget, the most important contingencies we have identified are accelerated roll-out of EVs and heat pumps, including scrappage schemes. Early scrappage in these areas is not included in the Balanced Pathway but could provide an option to go faster or to catch up if emissions reductions fall off track.

The cost of the transition

In our Balanced Pathway, the UK should start saving compared to a high-carbon economy during the Seventh Carbon Budget period. An initial investment is required for the UK’s transition to a low-carbon economy. This upfront investment will lead to significant savings in the future as inefficient fossil fuel technologies are replaced by more efficient, low-carbon alternatives.

Renewable energy and electric technologies are more energy efficient than their fossil fuel alternatives, meaning less wasted energy throughout the system. Energy losses are reduced from around 1,000 TWh today to around 500 TWh in 2050.

We estimate that a low-carbon electricity supply system will be cheaper per unit of electricity than the high-carbon alternative. Investment is needed now to both decarbonise and expand the system.

EVs will lead to a significant cost saving. Electric cars and vans are already generally cheaper to run and maintain, and will soon be cheaper to buy, than their fossil fuel-based alternatives. Households will see a significant reduction in the cost of driving.

Heat pumps are around three-to-four times more efficient than gas boilers, which should lead to lower household energy bills, provided policy costs are removed from electricity bills. However, UK homes are predominantly designed around gas heating and will need a one-off improvement to be suitable for heat pumps in many cases. This is a sizeable element of the total cost of Net Zero, and households will need policy support with these one-off costs.

Our costing estimates are lower than those from our Sixth Carbon Budget advice. This reflects different time periods, with costs and benefits between 2020 and 2024 now in the past, and updates to our underlying assumptions and methodology to align with the latest evidence. Updates have influenced our cost profile, both upwards and downwards.

Households

Household low-carbon choices contribute to one-third of emissions reduction in 2040. From an emissions perspective, the most impactful decisions most households will make are purchasing an electric car and a heat pump. Choices such as meat and dairy consumption and flying make smaller, but important contributions.

To understand what would make these kinds of choices accessible and affordable for households, we convened a citizens’ panel. The citizens were on board with the key choices households will need to make, provided the right policies are put in place.

Different policies were acceptable for choices seen as ‘necessities’ as opposed to ‘luxuries’. For heating and driving, public spending to support households was viewed as more acceptable than increases in price (such as fuel prices). For flying, which was seen as more optional, an increase in ticket prices was seen as more acceptable.

The panel wanted government support for upfront costs and trustworthy public information to explain what is needed and to address misconceptions.

People wanted to protect those with limited choice and/or on a low income, but also generally accepted the idea that higher-income households may make bigger savings by switching to low-carbon technologies first. Policies which penalise those that cannot afford to switch were seen as unacceptable. People were also concerned about protecting farmers’ livelihoods.

We used our Net Zero Distributional Model to assess the impact of our buildings and transport pathways on costs for households and the Exchequer, under illustrative policy packages. Alongside this, we undertook a more qualitative analysis of the potential impacts on protected and vulnerable groups and an assessment of non-monetary costs and benefits, such as health impacts.

For most types of household, savings on driving will support household budgets and be similar in magnitude to any additional costs from home energy over the period from 2025 to 2050 as a whole. However, policy support will be needed to ensure low-carbon technologies are accessible and affordable, especially for lower-income households, and to ensure that those who make the transition gain by doing so.

The transition can benefit people who are disadvantaged by reducing fuel poverty, improving air quality in disadvantaged areas, and improving workforce diversity in growing sectors. Net Zero policies should be accessible, with targeted outreach and support for home heating measures and improved accessibility of public transport and active travel.

We expect the transition to Net Zero to deliver improved health outcomes, through improved air quality, better insulated homes, increased active travel, and healthier diets. There will be some costs of time lost for home retrofit and on public transport.

The economy

The transition will make the UK economy more resilient, by reducing dependence on volatile international fossil fuel markets. Beyond this, most businesses will not be significantly affected by Net Zero in the long term, particularly those in the UK’s service sectors.

The UK’s energy will be predominantly home grown, reducing our reliance on imported fossil fuels. This will shield households and businesses from damaging price shocks. In the Balanced Pathway, total net energy imports fall from 867 TWh in 2025 to 202 TWh in 2050.

The costs of key low-carbon technologies, such as EVs, renewables, and batteries have fallen substantially over the period of the first three carbon budgets, as past investment has led to learning-by-doing benefits. The UK and other countries can start to reap these benefits in the years ahead, as well as helping to drive other, more nascent technologies down the cost curve. Continued improvements in technologies to produce electricity and power vehicles will lower costs over time, increasing productivity. Investments into renewables, batteries, and electrification technologies are now greater than fossil fuel investment internationally, adding momentum to these changes.

Some traded sectors where the UK has strengths could grow, such as green finance, while new industries could develop. Seizing these benefits will require rapid action and an environment conducive to investment, as other countries will also be looking to capture opportunities.

Some industrial sectors, such as cement, will face extra costs to eliminate emissions. Government should support these sectors to transition, which might include carbon border adjustment mechanisms. With the right policies in place, UK manufacturers could decarbonise early and take advantage of growing global demand for low-carbon goods, rather than being stranded in shrinking markets for high-carbon goods and services. Economic growth will not come from trying to sell goods other countries no longer want to buy.

Output of oil and gas and associated industries such as refineries will reduce, with impacts concentrated in a few regions and communities. Government needs to develop funded transition plans, working with those affected, to enable access to secure alternative employment and business opportunities.

Farmers will need to be supported to diversify their income streams away from livestock agriculture, with opportunities in areas such as woodland creation, peatland restoration, energy crops, and renewable energy.

Key actions

We have 43 priority recommendations to put the country on track to deliver the Seventh Carbon Budget. The full set can be found in Annex 1. There are seven core themes that underpin most of these recommendations:

Making electricity cheaper. The largest share of emissions reduction in our pathway comes from switching to low-carbon electric technologies across sectors including transport, buildings, and industry. Households and businesses need to be better incentivised to make these choices through the impacts they will see on their bills. This can be done through rebalancing prices to remove policy levies from electricity bills.

The largest share of emissions reduction in our pathway comes from switching to low-carbon electric technologies across sectors including transport, buildings, and industry. Households and businesses need to be better incentivised to make these choices through the impacts they will see on their bills. This can be done through rebalancing prices to remove policy levies from electricity bills. Removing barriers. People need to be able to install heat pumps and EV charge points in their homes and businesses. Industries require timely grid connections to allow them to move to electrified production processes. Grid infrastructure is essential to enable everyone to make use of domestically produced low-carbon electricity, reduce energy bills, and improve our energy security. Key processes and rules, including in planning, consenting, and regulatory funding, need to enable rapid deployment of low-carbon technologies.

People need to be able to install heat pumps and EV charge points in their homes and businesses. Industries require timely grid connections to allow them to move to electrified production processes. Grid infrastructure is essential to enable everyone to make use of domestically produced low-carbon electricity, reduce energy bills, and improve our energy security. Key processes and rules, including in planning, consenting, and regulatory funding, need to enable rapid deployment of low-carbon technologies. Providing certainty. In many key areas, the best way forward to decarbonise is now clear. Once the market has locked into a solution, it needs to be delivered. Government should support markets to do this by setting out clear, timely decisions on support for new technology choices, and dates for phasing out old technology. Certainty will provide confidence to consumers and investors. This should include confirming that there will be no role for hydrogen in home heating.

In many key areas, the best way forward to decarbonise is now clear. Once the market has locked into a solution, it needs to be delivered. Government should support markets to do this by setting out clear, timely decisions on support for new technology choices, and dates for phasing out old technology. Certainty will provide confidence to consumers and investors. This should include confirming that there will be no role for hydrogen in home heating. Supporting households to install low-carbon heating. While the Net Zero transition should lead to lower energy bills for consumers, support is needed to address barriers in upfront costs, especially for low-income households. Addressing barriers such as the price of electricity, lack of awareness, and misconceptions about heat pumps will also be crucial.

While the Net Zero transition should lead to lower energy bills for consumers, support is needed to address barriers in upfront costs, especially for low-income households. Addressing barriers such as the price of electricity, lack of awareness, and misconceptions about heat pumps will also be crucial. Setting out how government will support businesses. Businesses need clarity on the balance between government support and market mechanisms such as the UK Emissions Trading Scheme and carbon border adjustment mechanisms, so that they can make the transition to low-carbon operations. With the right support, UK businesses could decarbonise early and take advantage of growing global demand for low-carbon goods and services. Farmers and land managers need support to diversify land use into woodland creation, peatland restoration, energy crops, and renewable energy.

Businesses need clarity on the balance between government support and market mechanisms such as the UK Emissions Trading Scheme and carbon border adjustment mechanisms, so that they can make the transition to low-carbon operations. With the right support, UK businesses could decarbonise early and take advantage of growing global demand for low-carbon goods and services. Farmers and land managers need support to diversify land use into woodland creation, peatland restoration, energy crops, and renewable energy. Enabling the growth of skilled workforces and supporting workers in the transition. Growing workforces will be a critical enabler of some of the system-wide changes that are needed (for example, switching from gas to electric heating or expanding the electricity grid). We need a plan for how to do this. A small number of industries will change substantially, which could adversely impact communities if not managed well. Government, business, workers, and communities should proactively plan for how to address this and ensure that new opportunities are available in affected areas.

Growing workforces will be a critical enabler of some of the system-wide changes that are needed (for example, switching from gas to electric heating or expanding the electricity grid). We need a plan for how to do this. A small number of industries will change substantially, which could adversely impact communities if not managed well. Government, business, workers, and communities should proactively plan for how to address this and ensure that new opportunities are available in affected areas. Implementing an engagement strategy. Government should provide clear information to households and businesses. It should focus on what actions are most impactful in reducing emissions, the benefits of low-carbon choices, and providing trusted information.

Next steps

This report sets out our recommendation for the level of the Seventh Carbon Budget. We also set out our Balanced Pathway for how to achieve it, so that the Government and Parliament can be assured that the recommended level is feasible and deliverable. This is based on extensive sector modelling and data analysis, but also on insights from a wide range of stakeholders, including businesses, trade unions, and farmers, and from our citizens’ panel. The Committee is very grateful for all the support we have received in the process.

It is now for the Government to propose a level for the Seventh Carbon Budget to Parliament, and for Parliament to approve or reject that level. This must take place by 30 June 2026. The Government must also bring forward its proposals and policies to enable the carbon budgets set under the Climate Change Act to be met. The Committee supports the suggestion made by the previous Government that these proposals and policies should be published ahead of the vote on the level of the carbon budget. Alongside this, action needs to accelerate to meet existing targets.

Setting carbon budgets 12 years in the future provides certainty to investors, businesses, and households, allowing the time for technologies to be adopted and businesses and households to adjust. The Committee is required to advise Parliament every year on progress, allowing Parliament to hold the Government to account. Our next mitigation Progress Report is scheduled for June 2025.

The UK’s approach has influenced climate legislation around the world. Nearly 60 countries now have their own climate legislation. There are 25 independent advisory climate councils working to support national governments on delivering their climate commitments.

The mechanisms in the Climate Change Act provide an institutional framework for long-term decision-making and a counterbalance to short-term political pressures. The Committee provides advice, but we do not set policy. Decisions remain with the Government and Parliament.

Above all, to meet our Seventh Carbon Budget pathway, what is needed is action, continuing the momentum built up since the introduction of the Climate Change Act. Action by businesses, governments, and households can drive a rapid shift away from fossil fuels, boost investment, support good new jobs, and enhance the UK’s energy security.

Chapter 1: Climate change and emissions

Introduction and key messages

This chapter sets out the background to our Seventh Carbon Budget advice, summarising the latest scientific understanding of climate change, global emissions, and progress in reducing emissions in the UK.

Our key messages are:

The Earth’s climate is changing rapidly as human-induced warming is increasing at an unprecedented rate. Risks are increasing – extreme weather events show the impact that climate change is already having, both globally and in the UK. Every 0.1°C of additional warming creates increasing threats from climate change.

The science is clear that human activities have driven increases in greenhouse gases (GHGs) in the atmosphere to levels not previously experienced by our species. Long-term human-induced warming now reaches around 1.3ºC above pre-industrial levels and is rising at over 0.2ºC per decade.

Net Zero CO 2 emissions as well as deep reductions in other GHG emissions globally are required to halt further global warming. While it is now almost inevitable that warming levels will exceed 1.5ºC in the next ten years, it may still be possible to limit warming to 1.5ºC in the longer term, provided deep global emissions cuts begin immediately.

emissions as well as deep reductions in other GHG emissions globally are required to halt further global warming. While it is now almost inevitable that warming levels will exceed 1.5ºC in the next ten years, it may still be possible to limit warming to 1.5ºC in the longer term, provided deep global emissions cuts begin immediately. Global action must speed up. The UN Framework Convention on Climate Change (UNFCCC) process, the Paris Agreement, government policies, action from non-state actors, and market initiatives are driving progress. Global GHG emissions are likely near their peak, and on a per-capita basis have begun to fall. But much more action is needed.

All three of the UK’s carbon budgets have so far been achieved, with GHG emissions having roughly halved since 1990, driven largely by progress from expanding renewable power and phasing out coal in the electricity sector. Progress needs to extend to a broader range of sectors, alongside building resilience and supporting global decarbonisation.

The UK has a legally binding target to reach Net Zero GHG emissions by 2050, requiring sources of GHG emissions to be balanced by sinks. Warming is primarily determined by cumulative CO 2 emissions. Rapid action is crucial, and delays could have detrimental consequences such as stranded assets and rising costs. The other chapters of this report cover what the UK will need to do to achieve this target, which will involve urgent action this decade, as some areas of the economy will take a long time to fully decarbonise.

1.1 Climate change and emissions globally

1.1.1 Global climate change

Global temperatures are rising (Figure 1.1). Since we published our Sixth Carbon Budget advice in 2020, climate and weather records have continued to be broken around the world.

Global temperatures have continued to increase. 2024 was the warmest year on record, at 1.6ºC above pre-industrial average levels. [1] Long-term human-induced global warming in 2023 is estimated to have risen to 1.3ºC (1.1 to 1.7ºC 5th to 95th percentile range) above pre-industrial average levels. The rate of increase is unprecedented, reaching 0.26°C per decade over 2014 to 2023. ; [4]

Long-term human-induced global warming in 2023 is estimated to have risen to 1.3ºC (1.1 to 1.7ºC 5th to 95th percentile range) above pre-industrial average levels. The rate of increase is unprecedented, reaching 0.26°C per decade over 2014 to 2023. Records for climate and weather extremes continue to be broken. In 2023, ocean heat content reached its highest level in the 65-year observational record and global mean sea level reached a record high. Extreme weather events, such as wildfires and flooding, led to widespread loss of life and property destruction. [5]

Warming will inevitably continue in the near term. Global temperatures will continue to rise until the point when the world reaches Net Zero CO 2 emissions, with deep reductions in other GHGs also needed to limit warming.[6] This continued warming means that the world is rapidly approaching the lower end of the Paris Agreement long-term temperature goal (Box 1.1).

Figure 1.1 Global average temperature rise Description: Since 1850, global average temperatures have been increasing, with a particular acceleration beginning around 1970. Observed annual temperatures fluctuate around long-term human-induced warming.

Source: Smith, C. et al (2024) Climate indicator data: indicators of global climate change 2023 revision.

Notes: (1) Observed annual warming shown reflects an average across several datasets. (2) Long-term human-induced uses the ‘anthropogenic p50’ metric from Smith, C. et al (2024).

Box 1.1

Global warming of 1.5ºC Long-term warming The 2015 Paris Agreement has a single long-term temperature goal: ‘holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels’. While not formally defined in the Agreement itself, the warming levels referenced in this goal are widely interpreted as referring to multi-decadal human-induced average warming, excluding short-term natural variability.[7] For simplicity, this is often referred to as ‘long-term warming’. Since 2015, advancing climate science has further highlighted risks of exceeding 1.5ºC of long-term warming. The UNFCCC Conference of the Parties (COP) has recognised these risks and put a greater focus on pursuing efforts to keep to 1.5°C above pre-industrial levels – such as in the agreed conclusions on the first Global Stocktake under the Paris Agreement which concluded in 2023. Long-term global warming, as measured according to this interpretation, has not yet exceeded 1.5ºC above pre-industrial levels, but it is rapidly approaching it. Estimates of current human-induced long-term warming are around 1.31ºC above pre-industrial levels and are rising at 0.26ºC per decade.[8] Short-term variability The Earth’s temperature also experiences short-term fluctuations on both annual and monthly timescales which can temporarily increase or lower global temperatures from the human-induced long-term average. A major contributor to this is the El Niño cycle – which occurs in the Pacific but has a large impact on global temperature. The large and persistent El Niño occurring over late 2023 and 2024 was one of the reasons that global average temperature anomalies have repeatedly, but temporarily, reached 1.5ºC or higher above pre-industrial levels. February 2023 to January 2024 was the first 12-month period where the mean global average temperature exceeded 1.5ºC above pre-industrial levels, and June 2024 marked the twelfth consecutive month to reach or surpass 1.5ºC warming.[9] 2024 was the warmest calendar year on record, surpassing 1.5ºC warming for the first time.[10] This does not mean that the long-term temperature goal of the Paris Agreement has been breached; limiting long-term warming to 1.5ºC remains a central goal in the UNFCCC process. Looking ahead While it is theoretically possible to return long-term warming to below 1.5ºC following a limited overshoot, every increment of global warming brings additional risks, both in terms of climate impacts and to the chances of bringing warming back down over time. In nearly all of the modelled scenarios considered by the Intergovernmental Panel on Climate Change (IPCC), long-term warming exceeds 1.5ºC above pre-industrial levels in the early 2030s. Some degree of exceedance is therefore now almost inevitable.

Under current policies, the remaining global carbon budget for 1.5ºC would be exhausted by 2030. By the period of the Seventh Carbon Budget, global warming will likely be at or above 1.5ºC even in a global highest ambition scenario. [12]

Recent analyses suggest it is still technically possible to limit long-term warming to 1.5ºC with low overshoot. Deep and immediate emissions cuts are required, and the required rate of global emissions reduction increases with every year global action falls short of that implied by 1.5ºC-aligned pathways. [13];[14]

Long-term warming above 1.5ºC, even temporarily, will bring additional impacts that will need to be adapted to. The greater the overshoot, the larger the climate risks associated with the warming during and after the overshoot period, including the risk of crossing tipping points. ;[16]

A greater degree of overshoot also implies a larger need for CO 2 removal measures and net negative emissions to bring temperatures back down. Many of these measures are not yet proven at scale and have uncertain costs and large implications for energy systems.[17]

1.1.2 Global emissions

There is a near-linear relationship between cumulative anthropogenic CO 2 emissions and the global warming they cause. Continued emissions of CO 2 and other long-lived GHGs therefore imply continued warming.[18]

Global GHG emissions grew steeply throughout the second half of the 20th century and have continued to grow over recent years, albeit at a slowing rate.

Annual net global CO 2 emissions from fossil fuels and land use, land use change, and forestry (‘land use’) in 2023 were around 41 GtCO 2 . [19] This makes 2023 emissions approximately joint highest in the modern record, with 2019. Global emissions fell in 2020 as a result of restrictions put in place in response to the COVID-19 pandemic, but emissions have since rebounded. Preliminary estimates for 2024 suggest that CO 2 emissions from fossil fuels grew 0.8% in 2024, reaching 2.6% above 2019 levels. CO 2 emissions from land use have more short-term variability due to weather conditions but appear to be on a long-term downward trajectory. [20] Global emissions of methane contributed around one-third of the total GHG-driven global warming seen by 2010 to 2019. [21] Recent estimates show methane emissions continue to rise, implying a growing contribution to warming, and in 2023 were 2–4% above 2019 levels. [22]; [23]

emissions from fossil fuels and land use, land use change, and forestry (‘land use’) in 2023 were around 41 GtCO . This makes 2023 emissions approximately joint highest in the modern record, with 2019. The rate of increase has slowed over the past decade. The rate of growth in global fossil CO 2 emissions peaked at nearly 3% per year during the 2000s but has slowed in the last decade to less than 1% per year on average. [24] As of 2022, 36 countries have sustained emissions reductions for longer than 10 years. Among the largest emitters, compared to 2010 levels, emissions were approximately 30% higher in China, 9% lower in the United States, 54% higher in India and 18% lower in the European Union. ; [26] Global GHG emissions per capita (excluding emissions from land use, for which uncertainty is larger) broadly plateaued in the 2010s and in 2023 were 1% below peak levels, which occurred in 2012. [27]; [28]

emissions peaked at nearly 3% per year during the 2000s but has slowed in the last decade to less than 1% per year on average. Various sources expect global emissions to peak this decade. The International Energy Agency and Bloomberg New Energy Finance both project an immediate or mid-2020s peak for energy sector CO 2 emissions under current policy settings. [29]; [30] The UNFCCC assesses that if countries implement their 2030 emissions targets in full, global GHG emissions will peak in the 2020s. [31]

1.1.3 Latest scientific understanding

The Intergovernmental Panel on Climate Change (IPCC) completed its Sixth Assessment Report (AR6) cycle in 2023. This brings together the last five years of scientific studies and provides the scientific basis for this report. It concluded that human activities have ‘unequivocally caused global warming’, and that limiting human-induced global warming to 1.5ºC requires deep, rapid, and sustained reductions in GHG emissions.

Global temperatures are increasing as a result of human activities. The increase in average global surface temperatures has been driven by increases in GHG concentrations, which have unequivocally been caused by GHG emissions from fossil fuels and other human activities.

Human-caused climate change is already affecting weather extremes across the globe. Evidence has strengthened linking human influence to observed changes in extremes such as heatwaves, heavy rainfall, droughts, and tropical storms. Human influence has also likely increased the chance of these events occurring simultaneously. Vulnerable communities are disproportionately affected by these extreme events.

Risks increase as warming increases. Changes in extreme climate events become larger with every additional increment of warming. Concurrent extreme weather and sea level events are projected to become more frequent, storms to become more intense, and arid conditions to become more widespread. Abrupt and irreversible changes, including those triggered when tipping points are reached, become more likely and more impactful with further warming. For any given level of warming, many climate-related risks are assessed to be higher than in the IPCC’s previous assessments.

Limiting human-caused warming requires deep and immediate emissions cuts. Modelled IPCC pathways that limit warming to 1.5°C (with low or no overshoot) reach global Net Zero CO 2 in the early 2050s. These pathways see global GHG emissions peak by 2025 and assume deep and immediate cuts in emissions are made across most sectors this decade. Net Zero refers to a state in which GHG emissions entering the atmosphere are balanced by removals out of the atmosphere. Reaching Net Zero CO 2 emissions globally is necessary for limiting global warming to any level. In most modelled scenarios, Net Zero global GHG emissions is associated with net negative global CO 2 emissions (needed to balance residual non-CO 2 emissions) and falling temperatures. [32] Limiting warming requires both limiting cumulative CO 2 emissions and strong reductions in other GHGs. The IPCC has high confidence that the level of emissions reduction by 2030 will be key to determining whether warming can be limited to 1.5°C or 2°C. Global warming will continue to increase in the near term, as cumulative CO 2 emissions continue to rise in all of the IPCC’s modelled scenarios. Even under the IPCC’s very low emissions scenario, global warming is more likely than not to reach 1.5°C before 2040.

in the early 2050s. These pathways see global GHG emissions peak by 2025 and assume deep and immediate cuts in emissions are made across most sectors this decade. Rapid action on mitigation and adaptation can reduce projected losses and damage. Actions this decade are crucial to reducing emissions quickly and adapting to the changing climate, since there are often long implementation times. Delaying action could also have other detrimental consequences, including risking lock-in to high-emissions infrastructure, stranded assets, and rising costs for people and businesses. The IPCC reports a 10–23% climate change-caused decline in annual global GDP by 2100 under a high warming scenario, though statistical approaches point towards the upper end of this range. [33]; [34] Recent actuarial assessments emphasise the risk that losses could be considerably higher than currently considered in decision-making. [35]; [36] Integrated responses that address both mitigation and adaptation objectives can take advantage of synergies and reduce trade-offs.

Feasible and low-cost mitigation and adaptation options are already available. Systemic changes are needed to address the above risks, including roll-out of low-carbon technologies, reducing demand for high-carbon activities, and protecting and restoring ecosystems. Feasible, effective, and low-cost solutions to achieve these goals already exist and, in many cases, are ready to deploy at scale. The global economic benefit of limiting warming to below 2ºC exceeds the cost, even before considering co-impacts (such as effects on human health) and climate damages.

1.1.4 Global agreements on climate change

The UNFCCC process

The UNFCCC is the UN process for negotiating a global approach to address climate change. 197 countries plus the European Union are currently party to this process. Negotiations take place through the annual Conference of the Parties (COP). COP21 in 2015 negotiated the Paris Agreement, which is the latest global agreement on climate change mitigation.

The Paris Agreement : this set several goals and objectives extending across mitigation, adaptation, and finance, and including: A long-term temperature goal of limiting global warming to ‘well below 2ºC above pre-industrial levels’ and to ‘pursue efforts to’ limit warming to 1.5ºC above pre-industrial levels. On mitigation, setting three high-level milestones for global GHG emissions: global peaking as soon as possible, rapid reductions thereafter, and achieving a balance between emissions sources and sinks in the second half of this century (Net Zero GHGs). On adaptation, establishing a ‘global goal for adaptation’, with a view to enhancing adaptive capacity, strengthening resilience, and reducing vulnerability to climate change. This was further developed through the UAE Framework for Global Climate Resilience into a set of sectoral and process targets that was agreed at COP28. On finance, setting out the need to make finance flows consistent with these mitigation and adaptation objectives.

: this set several goals and objectives extending across mitigation, adaptation, and finance, and including: COP26: in 2021, COP26 took place in Glasgow with the UK as host and president of the negotiations. Participating nations agreed the Glasgow Climate Pact, which built on the Paris Agreement by calling on signatories to strengthen commitments to keep 1.5ºC in reach, finalising many of the rules underpinning the Agreement’s operation and promoting an unprecedented mobilisation of non-state actors (which has continued and grown in the years since).

in 2021, COP26 took place in Glasgow with the UK as host and president of the negotiations. Participating nations agreed the Glasgow Climate Pact, which built on the Paris Agreement by calling on signatories to strengthen commitments to keep 1.5ºC in reach, finalising many of the rules underpinning the Agreement’s operation and promoting an unprecedented mobilisation of non-state actors (which has continued and grown in the years since). Nationally Determined Contributions: under the Paris Agreement, countries are required to submit Nationally Determined Contributions (NDCs). NDCs should set out ambitious targets and plans to reduce emissions in line with the aims of the Agreement. The UK set its first NDC to require a reduction in GHG emissions (excluding emissions from international aviation and shipping) of at least 68% by 2030, compared to 1990 levels. In November 2024, the Prime Minister announced that the UK’s second NDC would require an at least 81% reduction in GHG emissions by 2035, compared to 1990 levels. Both NDCs have been set in line with the Committee’s advice.

under the Paris Agreement, countries are required to submit Nationally Determined Contributions (NDCs). NDCs should set out ambitious targets and plans to reduce emissions in line with the aims of the Agreement. The Global Stocktake: the Paris Agreement established a five-yearly Global Stocktake to assess progress towards achieving its objectives. The first Global Stocktake concluded at COP28 in 2023 and highlighted significant gaps between current action and that needed to achieve the Agreement’s goals, notably (in the context of this advice) on mitigation. Reacting to the latest scientific evidence and political momentum built at COP26 and since, the Global Stocktake placed particular emphasis on the importance of 1.5ºC, underscoring that climate impacts would be much less severe than at 2ºC, and noting the gap between existing commitments and a 1.5ºC-consistent trajectory. The Global Stocktake set out several global objectives, including: A tripling of global renewable energy capacity and a doubling of the global average annual rate of energy efficiency improvements by 2030. Accelerating the phase-down of unabated coal power and transitioning away from fossil fuels, with particular focus on accelerated action this decade. Accelerating reductions in non-CO 2 GHG emissions, including in particular methane by 2030. Accelerating deployment of low- and zero-emission technologies including zero-emission vehicles, renewables, nuclear, removals, and carbon capture technologies. Phasing out inefficient fossil fuel subsidies.

the Paris Agreement established a five-yearly Global Stocktake to assess progress towards achieving its objectives. The first Global Stocktake concluded at COP28 in 2023 and highlighted significant gaps between current action and that needed to achieve the Agreement’s goals, notably (in the context of this advice) on mitigation.

COP29: in 2024, COP29 took place in Baku, Azerbaijan and produced important agreements on a new climate finance goal and carbon markets. A new climate finance goal was agreed, with developed countries committing to take the lead in providing $300 billion per year to developing countries by 2035 as part of wider efforts to mobilise $1.3 trillion per year by 2035 from all public and private sources. Rules were agreed to operationalise carbon market provisions under the Paris Agreement, paving the way for trading to begin in the coming years.

in 2024, COP29 took place in Baku, Azerbaijan and produced important agreements on a new climate finance goal and carbon markets.

Global ambition and delivery

National Net Zero targets and ambitions now cover approximately 90% of present global GHG emissions. Many of these targets are assessed as lacking detail and credibility, with short-term ambitions out of step with long-term goals.[37]

These targets are increasingly accompanied by policy packages designed to incentivise take-up of low-carbon technologies and boost domestic energy security and low-carbon competitiveness, albeit still falling short of alignment with NDC targets. Major low-carbon transition programmes (often with a notable electrification focus) are underway in the world’s largest economies.

In China (which accounts for around a quarter of global GHG emissions), emissions reached an all-time high in 2023, but rapid deployment of renewables and electric vehicles have led independent analysts to suggest the country could be at or near peak emissions. [38]; [39] Its 2030 target for wind and solar capacity has been reached six years ahead of schedule, while the total of electric and hybrid vehicles surpassed 50% of monthly new car sales in mid-2024. [40]; [41]

Its 2030 target for wind and solar capacity has been reached six years ahead of schedule, while the total of electric and hybrid vehicles surpassed 50% of monthly new car sales in mid-2024. In the United States (which accounts for around 10% of global GHG emissions), legislation including the Inflation Reduction Act has begun to have a material impact on clean energy sectors, notably through clean electricity, vehicle, and manufacturing tax credits. [42] Clean energy and transportation investment has grown strongly in recent years. [43]

Clean energy and transportation investment has grown strongly in recent years. The European Union (which accounts for slightly over 5% of global GHG emissions) adopted key policy packages in 2023 in the form of the ‘Fit for 55’ programme and RePowerEU plan. These were followed by a strengthening of the EU Emissions Trading System and updated Energy Efficiency and Renewable Energy Directives (aiming for renewables to achieve a 45% share of final energy consumption). These measures must in turn be implemented at the Member State level.[44];[45]

Progress is being driven by improving economics of low-carbon technologies interacting with policy support. The global average cost for new electricity generation has fallen by 88% for solar PV, 60% for wind, and nearly 90% for battery storage since 2010.[46] Globally, the world now invests almost twice as much in clean energy as it does in fossil fuels, with clean energy investment expected to reach $2 trillion in 2024.[47]

Globally, however, efforts remain significantly off track to achieve the Paris Agreement temperature goal (Figure 1.2).

The latest assessments found that the remaining global carbon budget to retain a 50% chance of limiting global warming to 1.5ºC has fallen from 500 GtCO 2 at the time of our advice on the Sixth Carbon Budget (2020) to 235 GtCO 2 from the start of 2025. [49]; [50]

at the time of our advice on the Sixth Carbon Budget (2020) to 235 GtCO from the start of 2025. Global GHG emissions implied by NDCs are consistent with warming of around 2.5ºC by 2100 and would need to be 19–22 GtCO 2 e lower in 2030 than those implied by current NDCs to align with a 1.5ºC scenario. Current policies in turn fall short of what would be needed to deliver NDCs, implying warming of around 3ºC by 2100 and indicating an implementation gap on top of the ambition gap. [51]; [52]

e lower in 2030 than those implied by current NDCs to align with a 1.5ºC scenario. Current policies in turn fall short of what would be needed to deliver NDCs, implying warming of around 3ºC by 2100 and indicating an implementation gap on top of the ambition gap. Nonetheless, significant progress has been made in recent years. When major emitters’ Net Zero pledges are considered alongside NDCs, latest commitments imply warming below 2ºC if implemented in full (which countries are not currently on track to do), compared to the 3–4ºC projected before the Paris Agreement was adopted.[53]

Figure 1.2 Global GHG emissions under current ambition, compared to Paris-aligned trajectories Description: Current policies and commitments imply flat or falling future global emissions, above scenarios consistent with limiting warming to 1.5ºC or well below 2ºC.

Source: Rogelj, J., Den Elzen, M.G.J. and Portugal Pereira, J. (2024) The UNEP Emissions Gap Report 2024: No More Hot Air … Please! With a Massive Gap between Rhetoric and Reality, Countries Draft New Climate Commitments. UNEP.

Notes: (1) For simplicity, current policies and current ambition scenarios show median pathways only, masking a wider uncertainty range. Ranges shown for 1.5ºC and well below 2ºC scenarios are 20th-80th percentiles, as presented in the Emissions Gap Report but distinct from the ranges shown in Figure 10.2. (2) 1.5ºC and well below 2ºC scenarios generally assume cost-effective global action beginning in 2020. (3) Other than for current policies, scenario data is available from 2025 onwards – dotted lines joining historical to scenarios are for visual consistency only. (4) For consistency with the Emissions Gap Report source, but in contrast to UK emissions presented in this report, emissions here are presented in terms of global warming potentials from the Intergovernmental Panel on Climate Change’s fourth assessment report. NDCs refer to Nationally Determined Contributions – emissions targets submitted by parties to the Paris Agreement.

1.2 Climate change and emissions in the UK

1.2.1 Climate change in the UK

Evidence of climate change is clear here in the UK – the changes that are being seen are consistent with what would be expected due to human-induced global climate change.[54]

Average temperatures are increasing . The UK is warming at a rate similar to global land temperatures. 2023 was the second warmest year on record for the UK, with only 2022 being warmer. The UK’s 10 warmest years on record have all been in the 21st century. [55]

. The UK is warming at a rate similar to global land temperatures. 2023 was the second warmest year on record for the UK, with only 2022 being warmer. The UK’s 10 warmest years on record have all been in the 21st century. Temperature extremes are changing faster than average temperatures . 2022 included the hottest day on record, the first time temperatures somewhere in the UK have exceeded 40°C. Averaged across the UK, the typical warmest temperature of the year has increased by around 2.8°C from the 1960s, 1970s, and 1980s to the most recent decade, with much more rapid rates of increase in South East England. ; [57]

. 2022 included the hottest day on record, the first time temperatures somewhere in the UK have exceeded 40°C. Averaged across the UK, the typical warmest temperature of the year has increased by around 2.8°C from the 1960s, 1970s, and 1980s to the most recent decade, with much more rapid rates of increase in South East England. Sea levels are rising . The rate of UK sea-level rise is increasing. The annual increase has risen to 2.4 mm/year, which is above the long-term average of 1.5 mm/year since the 1900s. [58]

. The rate of UK sea-level rise is increasing. The annual increase has risen to 2.4 mm/year, which is above the long-term average of 1.5 mm/year since the 1900s. Other weather extremes are also changing. Heavy rainfall metrics generally show an increase in very wet days across the UK, but the expected signal from climate change remains hard to distinguish from the large interannual variability in the observational record. The 18 months to March 2024 was the wettest 18-month period on record in England.

These changes are leading to damaging impacts on people, ecosystems, and infrastructure for which the UK is insufficiently prepared. This is emphasised by impacts of extreme weather in the UK over the last five years – most clearly in the summer 2022 heatwave.[59]

Health and economy: the July 2022 heatwave, and the subsequent heatwaves in August 2022, led to a record number of additional heat-related deaths with over 3,000 reported. These occurred mostly among the elderly and those with existing ill-health. Heat exposure is estimated to cost the UK economy £260–£300 million per year. [60]

the July 2022 heatwave, and the subsequent heatwaves in August 2022, led to a record number of additional heat-related deaths with over 3,000 reported. These occurred mostly among the elderly and those with existing ill-health. Heat exposure is estimated to cost the UK economy £260–£300 million per year. Infrastructure and communities: infrastructure impacts from the July 2022 heatwave were extensive, with flights suspended and disruption to rail and road networks. The heatwave caused power cuts due to conductors sagging and transformers overheating. Increased electricity demand presented challenges for system security and operability. There were large spikes in 999 calls and fire services declared major incidents due to multiple wildfires.

infrastructure impacts from the July 2022 heatwave were extensive, with flights suspended and disruption to rail and road networks. The heatwave caused power cuts due to conductors sagging and transformers overheating. Increased electricity demand presented challenges for system security and operability. There were large spikes in 999 calls and fire services declared major incidents due to multiple wildfires. Agriculture and ecosystems: the wettest 18-month period on record (from October 2022 to March 2024) resulted in thousands of acres of farmland being submerged for extended periods, leading to the loss of crops and animals. This followed a period of significant drought in 2022, where the combination of the lack of rainfall with the summer heat meant soils were very dry. This stressed ecosystems and agriculture and led to record numbers of large wildfires.

We expect these observed trends in UK weather to continue. As detailed in the Third UK Climate Change Risk Assessment, we can expect warmer and wetter winters, drier and hotter summers, and continued sea level rise over the coming decades.[62] The evidence base for the next UK Climate Change Risk Assessment – which the Committee will publish in 2026 – will provide an updated assessment of both the risks and adaptation actions that will be needed to prepare the UK for the expected effects of climate change.

1.2.2 The UK contribution to global emissions

UK GHG emissions were 423.3 MtCO 2 e in 2023, including the UK’s share of international aviation and shipping, based on provisional data. This is 49.5% lower than in 1990. UK emissions excluding those from international aviation and shipping have now fallen by over half.

The UK’s share of global emissions has fallen from 2.3% to below 1% over this period.

Despite these reductions, the UK’s emissions are still important. Over a quarter of global emissions are produced by countries with a share of global emissions less than 1%. [63]

UK cumulative CO 2 emissions since 1750 are estimated to be around 79 GtCO 2 .[64] This represents around 4.4% of estimated global emissions to date.

1.2.3 The Climate Change Act and UK carbon budgets

The Climate Change Act

The Climate Change Act (2008) is the UK’s legal framework for tackling and responding to climate change. The Act sets in law a long-term goal of reaching Net Zero UK GHG emissions by 2050 as well as intermediate steps defined by the level of carbon budgets, which set legally binding caps on UK GHG emissions over five-year periods. These make clear the required level of emissions reduction in the short and medium term to ensure the UK is on track to decarbonise by 2050.

Under the Act, the Committee is required to advise the UK Government on the level of each carbon budget. The Government must set in law the level of each carbon budget no later than 30 June in the twelfth year before the beginning of the period in question. This is done after first considering the Committee’s advice and any representations made by the Scottish and Welsh Governments and the Northern Ireland Executive.

The Committee has previously advised on the levels of the first six carbon budgets, and the Government has chosen to follow this advice in each instance. [65]; [66]; [67]; [68]; [69]; [70]; [71]; [72]

Prior to setting it in law, the UK Government’s proposed level of each carbon budget is laid before and agreed by Parliament. The Sixth Carbon Budget was supported across political parties in the House of Commons. The Committee’s detailed reports on Net Zero and the Sixth Carbon Budget were available to aid their scrutiny.

The UK Government must prepare the policies and proposals required to achieve the target.

This report provides the Committee’s advice on the level of the Seventh Carbon Budget, covering the period from 2038 to 2042. Scotland, Wales, and Northern Ireland all have their own legal frameworks and their own decarbonisation targets. The Committee will provide separate advice to each of the devolved administrations on their carbon budgets later this year.

The UK’s First, Second, and Third Carbon Budgets, covering the periods 2008 to 2012, 2013 to 2017 and 2018 to 2022 were 3,018 MtCO 2 e, 2,782 MtCO 2 e and 2,544 MtCO 2 e respectively. These targets were set based on the old 2050 target of an 80% reduction in emissions. The UK has met all of these targets, with GHG emissions having roughly halved since 1990 (Figure 1.3).

The UK outperformed these first three carbon budgets by 36 MtCO 2 e, 384 MtCO 2 e, and 391 MtCO 2 e respectively. In percentage terms, these budgets were outperformed by 1%, 14% and 15% respectively.

e, 384 MtCO e, and 391 MtCO e respectively. In percentage terms, these budgets were outperformed by 1%, 14% and 15% respectively. Emissions savings from electricity and fuel supply, due to the phase-out of coal generation and roll-out of renewables, contributed more than half of the reductions seen over this period. Reductions in industry, waste, surface transport, and buildings also played a role.

Figure 1.3 UK historical emissions and existing targets Description: The UK’s greenhouse gas emissions have roughly halved since 1990 and the first three carbon budgets have been achieved.

Source: Department for Energy Security and Net Zero (DESNZ) (2024) Provisional UK greenhouse gas emissions national statistics 2023; DESNZ (2024) Final UK greenhouse gas emissions national statistics: 1990 to 2022.

Notes: (1) Emissions from international aviation and shipping (IAS) are included in historical emissions and added to the first five carbon budgets and the two Nationally Determined Contributions (NDCs) (in which they are not included) to allow for a direct comparison. (2) ‘CB’ refers to UK carbon budgets: ‘CB1’ refers to the First Carbon Budget; subsequent numbers refer to subsequent carbon budgets.

Active legislated UK carbon budgets

The UK’s emissions target for 2050 is Net Zero. This was legislated in 2019 and was a step up from the previous target of an 80% reduction. It remains an appropriate long-term target for the UK.

The latest science indicates that in global pathways temperature increases stabilise after Net Zero CO 2 is reached globally. At Net Zero GHGs, temperatures start to reduce, as short-lived residual methane emissions are being balanced by long-lived CO 2 removal.

is reached globally. At Net Zero GHGs, temperatures start to reduce, as short-lived residual methane emissions are being balanced by long-lived CO removal. Achieving Net Zero GHG emissions (with Net Zero CO 2 reached sooner) will therefore halt and begin to reverse the UK’s contribution to global warming. The UK should aim to achieve this as soon as possible, to show leadership in reducing global temperatures.

reached sooner) will therefore halt and begin to reverse the UK’s contribution to global warming. The UK should aim to achieve this as soon as possible, to show leadership in reducing global temperatures. The UK’s target of Net Zero by 2050 is consistent with IPCC scenarios that limit warming to 1.5ºC. NDCs and carbon budgets are set to define a feasible pathway to achieve this that is both ambitious in its pace and deliverable.

The next three steps on the way to Net Zero are the Fourth, Fifth and Sixth Carbon Budgets, covering the periods 2023 to 2027, 2028 to 2032, and 2033 to 2037, which are legislated at 1,950 MtCO 2 e, 1,725 MtCO 2 e, and 965 MtCO 2 e respectively (Figure 1.3).

The Fourth and Fifth Carbon Budgets do not include international aviation and shipping emissions. The Sixth Carbon Budget is the first UK target to include emissions from the UK’s share of emissions from international aviation and shipping, but this is not yet in legislation.

The steep reduction between the Fifth and Sixth Carbon Budgets is due to the fact that the Sixth Carbon Budget is the first set in line with Net Zero. The Fourth and Fifth Carbon Budgets were set on a trajectory to the previous 80% target. These carbon budgets will therefore need to be overperformed in order to be on a sensible path to Net Zero.

The UK’s 2030 NDC provides a target for this time period that is consistent with a pathway to Net Zero by 2050. The UK has also recently confirmed its 2035 NDC, which requires a similar level of emissions reduction to the Sixth Carbon Budget.

1.2.4 UK emissions by sector

The UK’s emissions reductions since 1990 have been driven by strong progress in decarbonising electricity supply (Figure 1.4). In some important sectors, including surface transport (outside the effects of the COVID-19 pandemic) and agriculture, emissions trends have been broadly flat. The carbon sequestered in land use sinks has decreased over this period.

In 1990, electricity supply was the UK’s highest-emitting sector. Since then, emissions from this sector have fallen by 81%, with most of this reduction coming since 2008. These trends have been driven by the ramp-up in renewable generation and the complete phase-out of coal. The UK’s last coal-fired power station, Ratcliffe-on-Soar, closed in September 2024. This was a historic moment – the UK becoming the first major economy to phase-out coal received worldwide attention. The UK also has a high share of renewables relative to most other OECD countries.

There have been falls in emissions from industry, fuel supply, waste, and buildings. In industry, emissions have fallen by 63% since 1990. Much of this has been due to a fall in the output of emissions-intensive industrial sectors, in particular steel and chemicals, due to a structural shift towards less carbon-intensive but higher-value industrial output. Fuel supply emissions have fallen by 60% since 1990, primarily driven by a reduction in coal mining and the associated methane emissions. Waste emissions have fallen by 66% since 1990. The main cause of this has been reductions in methane emissions from landfill because of the introduction of a tax. There has been a gradual reduction in emissions from buildings. This has been driven by policies to improve the efficiency of heating appliances and deliver investments in building fabric efficiency, along with more recent reductions in heating demand due to recent warmer-than-average temperatures and high gas prices.

Emissions in surface transport, aviation, agriculture, land use, and F-gases have shown limited or no reductions overall. However, strong recent progress in electric car sales has started to have a small positive contribution towards emissions reduction in surface transport.

Figure 1.4 UK emissions by sector since 1990 Description: Reductions in emissions since 1990 have been predominantly driven by the electricity supply and industry sectors. Emissions in many other sectors have shown limited or no reductions overall.

Source: DESNZ (2024) Provisional UK greenhouse gas emissions national statistics 2023; DESNZ (2024) Final UK greenhouse gas emissions national statistics: 1990 to 2022.

Notes: (1) The land use sector is a combination of positive sources of emissions and negative sinks of emissions. (2) Agriculture, waste, F-gases, and land use emissions go to 2022 only because the provisional 2023 estimates are not made for non-CO 2 greenhouse gases.

Chapter 2: Developing a pathway to Net Zero and the Seventh Carbon Budget

Introduction and key messages

This chapter sets out our approach to developing our Balanced Pathway, which provides the basis for our recommendation on the level of the Seventh Carbon Budget.

Our key messages are:

The Balanced Pathway is an ambitious, deliverable pathway for the UK to reach Net Zero by 2050, based on detailed modelling of cost-effective, feasible decarbonisation options.

The pathway is made up of the roll-out of low-carbon technologies and land-based measures, and reductions in demand for high-carbon activities. Our analysis is based on a broad range of evidence and data and has been validated through consideration of historical and international comparisons, stakeholder engagement, and a citizens’ panel.

Most emissions can be eliminated through cost-effective and feasible options to almost completely decarbonise the majority of sectors. Some emissions are expected to remain in sectors with no credible way to completely decarbonise by 2050. Our pathway explores the best balance between credible emissions reduction options and greenhouse gas (GHG) removals to counteract unavoidable residual emissions.

Our Methodology Report contains further details of our analytical approach.

2.1 Baseline emissions with no further decarbonisation action

2.1.1 The role of a baseline in our analysis

We compare our modelled pathway to Net Zero with a hypothetical baseline pathway that does not include further climate action, enabling us to calculate the required abatement, investment needs, costs, and savings associated with the future actions to reduce UK GHG emissions.

In our baseline, low-carbon technologies generally remain at today’s stock levels and today’s efficiencies. Projections for baseline emissions over time are based on projected changes to factors such as population, GDP, the warming climate, and fuel prices. Overall, this generally leads to a gradual increase in baseline emissions over time, although there are differences in each sector. There is also considerable uncertainty associated with the impact of many of these factors, which we address in Chapter 6. As our baseline reflects the latest evidence on the current stock share of low-carbon technologies and demand for high-carbon activities, it includes progress that has been made over recent years and therefore differs from that used in previous carbon budget advice.

Our approach to constructing a baseline allows us to demonstrate the full range of actions needed to reduce emissions, without taking a view as to whether they are driven by policy or markets. As a result, the full range of abatement actions that are required to move from today’s world to Net Zero can be quantified and costed within our pathway. Our baseline is not intended as a projection of what may happen based on current trends or markets. This differs from other baseline definitions:

The Government’s Carbon Budget Delivery Plan uses a baseline derived from their Energy and Emissions Projections (EEP), which includes estimated emissions reductions from existing and some planned policies. [75]

Some baseline definitions (including those used in government policy appraisal) include a projected uptake of low-carbon technologies in the absence of new policy.[76] For example, they would predict a rise in sales of electric vehicles (EVs).

2.1.2 Emissions in our baseline

In our baseline, emissions grow steadily to 16% above 2023 levels by 2050. This is driven mainly by the baselines for surface transport and aviation, which rise in line with population and GDP.

In most sectors, our baseline assessment is based on either published government scenarios or government modelling. This provides a common basis for interpreting our advice. This includes the industry, agriculture, fuel supply, waste, and non-residential buildings sectors, for which we use EEP scenarios excluding emissions savings associated with any policies that go beyond those already being realised today. In surface transport, we assume the vehicle fleet remains split among powertrains as it is today and use the core forecast from the Department for Transport’s (DfT) National Road Traffic Projections – adjusted to match the latest actual data – to give the levels of traffic demand. [77] Our aviation and shipping baselines are based on bespoke runs of DfT models, assuming no change in fleet makeups and demand primarily driven by GDP growth. For electricity supply, our baseline comes from modelling undertaken for us by AFRY, using their BID3 model which is also used by the Department for Energy Security and Net Zero (DESNZ). [79] It uses the level of electricity demand modelled in our baselines across sectors and assumes that new low-carbon generation is only deployed to replace existing low-carbon assets at end-of-life.

In the other sectors, we developed our baseline using in-house or commissioned models. In residential buildings, we commissioned Kamma to produce a baseline dataset representing today’s building stock. The fabric of, and types of heating system used by, these existing buildings are assumed to remain the same over time, with demand for heating slightly declining as the climate warms. The housing stock grows in line with projected future housebuilding rates, with new builds using gas heating. Our land use baseline is based on modelling by the UK Centre for Ecology and Hydrology. This is calibrated against the most recent inventory estimates of land use sources and sinks and projects forward recent trends in what land is being used for. For F-gases, our baseline was produced by Ricardo, considering population changes and European legislation which is already affecting component design. The baseline includes no engineered removals as these have not yet been deployed in the UK.

2.2 Developing our Balanced Pathway

2.2.1 Approach to pathway analysis

Our advice on the level of the Seventh Carbon Budget is informed by an updated Balanced Pathway. This is an ambitious, deliverable pathway that represents our assessment of the UK’s best path to reach Net Zero by 2050, based on the latest evidence and data.

The pathway is developed by dividing the UK’s emissions into sectors of the economy and determining credible emissions reductions for each from 2025 to 2050. In each sector, we start from the baseline and consider which emissions reduction options would be most suitable. In many of the sectors that currently dominate the UK’s emissions, including surface transport, buildings, industry, and electricity supply, cost-effective options are expected to be available to almost completely decarbonise the sector. The pathway therefore explores options to achieve this. Some emissions are expected to remain in sectors with no credible way to completely decarbonise, including agriculture, aviation, waste, and land use sources. Our pathway explores the best balance between credible options to reduce emissions and balancing these with greenhouse gas removals, both in ‘nature’ (via carbon sequestration in land use sinks) and ‘engineered removals’ (such as approaches utilising carbon capture and storage (CCS)).

Interactions between sectors are captured through modelling of the energy system required to supply the energy used in each sector. This includes consideration of the roll-out of low-carbon electricity generation, the role of flexibility in supply and end-use sectors, and other low-carbon energy carriers (for example, low-carbon hydrogen).

In forming judgements on feasible actions for inclusion in our pathway, we consider a range of evidence, including the projected pace of technology development, possible shifts in societal attitudes, data on costs and choices, current and historical trends, and examples of progress in other countries. We have engaged with a broad range of stakeholders from across government, industry, and wider society to validate assumptions, and we convened a citizens’ panel to explore the question of what an accessible and affordable vision of Net Zero would be for households.

2.2.2 Key drivers and constraints in our modelling

We consider two broad types of emissions reduction action in our pathway:

Roll-out of low-carbon technologies and land-based actions. This includes the roll-out of electric and other low-carbon technologies and greenhouse gas removals, enabled by building a system that meets the required energy demand using a resilient mix of low-carbon sources. Credible roll-out rates depend on both the available supply of low-carbon technologies and the demand for them. Similar roll-out considerations also apply to actions within nature that can store carbon in land-based sinks or reduce emissions from land.

This includes the roll-out of electric and other low-carbon technologies and greenhouse gas removals, enabled by building a system that meets the required energy demand using a resilient mix of low-carbon sources. Credible roll-out rates depend on both the available supply of low-carbon technologies and the demand for them. Similar roll-out considerations also apply to actions within nature that can store carbon in land-based sinks or reduce emissions from land. Reducing demand for high-carbon activities. This depends on sustained household and business choices to reduce high-carbon activities. We include measures to improve the efficiency with which high-carbon technologies are used within this area.

When determining whether or when an option is suitable for inclusion in our pathway, we take an evidence-driven approach to assess an ambitious but deliverable level and pace of uptake. For both low-carbon technologies and reducing demand, we base our assessment on what has been achieved or evidenced to date. For low-carbon technologies, this involves relying on technologies that we can confidently assume will be ready to operate at scale before 2050 and assessing credible rates of uptake; for reducing demand, this involves considering successful case studies as well as current and historical trends and social research to assess what sustained shifts in choices could feasibly be achieved by 2050. Our approaches in each area are outlined in Section 2.3 and Section 2.4.

2.2.3 Factors that we consider in developing an emissions pathway

Under the Climate Change Act, carbon budgets must take account of a range of matters. We have considered all of these in our analysis:

Scientific knowledge about climate change. The latest scientific understanding is summarised in Section 1.1. The 2050 Net Zero target, the UK’s NDCs, and the Sixth Carbon Budget remain consistent with this – our analysis determines an ambitious, deliverable pathway to meet these in a cost-effective manner.

The latest scientific understanding is summarised in Section 1.1. The 2050 Net Zero target, the UK’s NDCs, and the Sixth Carbon Budget remain consistent with this – our analysis determines an ambitious, deliverable pathway to meet these in a cost-effective manner. Technology relevant to climate change. Our approach to modelling technology roll-out and the constraints that determine this is outlined in the following section, Section 2.3, as well as in the sectoral sections in Chapter 7.

Our approach to modelling technology roll-out and the constraints that determine this is outlined in the following section, Section 2.3, as well as in the sectoral sections in Chapter 7. Economic circumstances. The costs and cost savings of the pathway are set out in Chapter 4, while the investment opportunities arising from these and the impact on the economy, businesses, and workers are assessed in Chapter 9.

The costs and cost savings of the pathway are set out in Chapter 4, while the investment opportunities arising from these and the impact on the economy, businesses, and workers are assessed in Chapter 9. Fiscal circumstances. Fiscal impacts, including impacts on public spending, are assessed in Section 4.3. Some possible uses of taxation are discussed in Chapter 8.

Fiscal impacts, including impacts on public spending, are assessed in Section 4.3. Some possible uses of taxation are discussed in Chapter 8. Social circumstances. Chapter 8 explores the impacts of the pathway on households. This includes impacts on groups with protected characteristics and wider distributional impacts, while we consider impacts on fuel poverty in Section 7.2. Section 2.3, Section 2.4, and the sectoral sections in Chapter 7 discuss the role household and business choices play in our modelling.

Chapter 8 explores the impacts of the pathway on households. This includes impacts on groups with protected characteristics and wider distributional impacts, while we consider impacts on fuel poverty in Section 7.2. Section 2.3, Section 2.4, and the sectoral sections in Chapter 7 discuss the role household and business choices play in our modelling. Energy policy. Our analysis of the electricity and fuel supply sectors is set out in Section 7.5 and Section 7.7, respectively. In addition, what the pathway means for overall demand for different energy carriers and its implications for energy security are explored in Section 10.2.

Our analysis of the electricity and fuel supply sectors is set out in Section 7.5 and Section 7.7, respectively. In addition, what the pathway means for overall demand for different energy carriers and its implications for energy security are explored in Section 10.2. Differences in circumstances between England, Wales, Scotland, and Northern Ireland. We summarise how the different circumstances in each nation are reflected in our analysis in Section 3.4. Emissions pathways for Scotland, Wales, and Northern Ireland will be published in separate advice reports to the devolved administrations later in 2025.

We summarise how the different circumstances in each nation are reflected in our analysis in Section 3.4. Emissions pathways for Scotland, Wales, and Northern Ireland will be published in separate advice reports to the devolved administrations later in 2025. Circumstances at European and international level. Section 1.1 outlines the current international context, while Section 10.1 assesses how our pathway fits within this context.

Section 1.1 outlines the current international context, while Section 10.1 assesses how our pathway fits within this context. International aviation and shipping. The contribution of international aviation and shipping emissions to the recommended budget level is discussed in Section 3.1, while our analytical approach to these sectors is set out in Section 7.6 and Section 7.10.

There is clearly considerable uncertainty around how factors such as costs and feasibility will develop over a 25-year timeframe. We explore this in Chapter 6.

2.3 Roll-out of low-carbon technologies and land-based actions

Our pathway depends on the rate of roll-out of a range of low-carbon technologies and land-based actions. It will be important to monitor indicators of technology development and uptake, as well as leading indicators (where available) of supply and demand. We discuss this in Chapter 5.

2.3.1 Low-carbon technologies

All of the technologies that we need already exist in some form: many are commercially viable and can be deployed at scale today; others are commercially viable but yet to be deployed at scale; and some novel technologies have been prototyped and demonstrated but require further support and refinement to commercialise. We also expect developments to result in improvements to existing technological solutions and to offer new options. We avoid relying heavily on speculative future technological advances lacking a firm evidence base.

There are two key components to our analysis of technology roll-out: cost effectiveness (both as a snapshot and from a dynamic perspective) and feasibility constraints on the pace of investment and delivery (both supply-side and demand-side). There have been substantial cost reductions in many low-carbon technologies over recent years. As a result, it is often feasibility constraints that are binding in determining the shape of the deployment pathways for many technologies.

Cost effectiveness

When constructing our sectoral pathways, consideration is given to the most cost-effective choice between alternative credible low- or zero-carbon technologies and emissions reduction measures, and to the timing of roll-out.

Snapshot cost effectiveness : in general, we consider technologies for inclusion in the pathway only once they become cost effective compared to the UK Government’s ‘target-consistent’ carbon values. [83] We assess this by comparing the abatement cost of a new unit of technology (see Section 4.2.1) with the Government’s carbon values, which represent the value that UK society places on avoiding emitting 1 tCO 2 e. They were developed by the UK Government to be consistent with the 2050 Net Zero target and to take a least-cost approach to minimising cumulative emissions over the period to 2050. A measure can be cost effective despite being more expensive than its high-carbon alternative if the cost difference is lower than the implied cost saving from reducing emissions. This will happen in the early stages of many technology roll-outs, and provides justification for incentives/regulations to enable uptake sooner than might occur if relying on financial costs alone. In many cases, this will help to drive costs down, resulting in low-carbon technologies eventually becoming cost saving. We do not directly calculate this spillover benefit in our cost effectiveness assessment, but we take it into account in our assessment of dynamic cost effectiveness (see below). For many technologies (including solar, wind turbines, and batteries), consistent and rapid cost reductions have been seen over the past 20 years. [84]; [85] We project how costs could develop in our pathway based on observed learning rates and expectations about how these may continue. Recent research found that the potential scale of cost reductions could be greater than considered in most energy-economy models. [86] Many key measures (including EVs and heat pumps in new homes) have already reached snapshot cost effectiveness for at least some parts of the market. By the Seventh Carbon Budget period, this will be true in even more cases. At that point, feasibility constraints often play a more binding role in determining roll-out rates. In cases where multiple competing low-carbon technologies are credible, we consider the costs and feasibility of each and generally select the most cost-effective feasible mix (for instance choosing electrification, hydrogen, or CCS across different industrial sites). Where one technology is already being deployed at scale and is clearly expected to dominate the market (as is the case with EVs), we focus on this in preference to more niche options, while in some cases where technologies are at an earlier stage of development (such as solid versus liquid direct air carbon capture and storage (DACCS)), we impose a split choice in our modelling to maintain optionality, reflecting current uncertainty.

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