NEWS | January 2025

The Climate Change Committee (CCC) has published its advice on the Seventh Carbon Budget.  It recommends a 535 MtCO2e limit for emissions (including from international aviation and shipping) for the five-year period 2038 to 2042, with electrification including decarbonisation of the grid and the rollout of heat pumps and electric vehicles underpinning the majority of emissions reductions. 

The Centre for Energy Policy (CEP) welcomes the report that provides a valuable and detailed set of recommendations on areas for Government action in making progress against its legislated climate change targets. Government must set out a proposed plan to Parliament by the end of June 2026.

As Government considers how to implement this advice in developing the Seventh Carbon Budget, CEP would urge a focus on two key areas.

Clarity on the question of who pays for net zero, how and when

The first is around the central question of who pays for net zero, how and when, particularly given current fiscal constraints, cost of living pressures, and in maintaining and strengthening public support for net zero and climate action. The CCC estimates an average investment of £26 billion per year will be needed between 2025 and 2050, with this investment offset by savings of around £22 billion per year on average in operating costs. As CEP has consistently highlighted since it was established a decade ago, decisions on how these costs are met and the timing will have significant consequences for households, businesses and the wider economy.

CEP Director, Professor Karen Turner said:

“The breadth and depth of this analysis from the Climate Change Committee is welcome.”

“While the report sets out the anticipated costs and the wider economy and distributional impacts, the Committee argues that it is for Government to decide on how to support and resource the transition to a low carbon economy in the UK.”

“These decisions will be pivotal in achieving a net zero transition that delivers sustainable and more equitable prosperity. Thus, Government needs more input on how the costs and distributional impacts may be affected by different decisions on who pays.

“Therefore, in setting out its proposals for the Seventh Carbon Budget, Government must provide a clear indication of how these costs will be met – through taxation, energy bills and private sector investment – and demonstrate how it plans to take advantage of and/or mitigate the associated opportunities and challenges arising as a result.”

Ensuring the benefits of net zero are shared equitably

CEP Senior Research Fellow, Dr. Christian Calvillo contributed to the report and in particular the section on the impact on people with protected characteristics (e.g., linked to age, ethnicity and disability) and vulnerable groups, drawing on his research as part of the Energy Demand Research Centre. 

The CCC recommends that Government must act to remove barriers, support households and ensure that benefits of transitioning to net zero such as lower energy bills and new jobs are widely shared and do not worsen inequalities. 

Dr Calvillo’s research highlights several factors that could prevent this from happening. For example, people with protected characteristics are more likely to have lower incomes, be less flexible in their travel needs, or live in flats or rented accommodation. All of which reduce their access to more sustainable forms of heating and transport and mean that Government will need to act to redress these inequities.

CEP Senior Research Fellow. Dr Calvillo said:

“It was a real pleasure to work with colleagues on developing this report for the Climate Change Committee, and it’s heartening to see the focus on equity.”

“Government must act on the Committee’s advice to ensure the benefits of net zero are widely and more equitably shared.”

“This means going beyond financial incentives and designing policy responses that are regionally sensitive, targeted to particular needs and that integrate across different areas including health, welfare, work, transport and energy.”

“Action on tackling energy inequities could save costs and improve lives and wellbeing. Importantly, it could also help secure public support for the wider net zero transition.”