United Kingdom

Sector: National Government

Carbon Footprint:

> 659,300,000 metric tonnes CO₂e (2004)

TARGETS

> 20% CO₂ reduction on 1990 levels by 2010; 60% CO₂ reduction on current levels by 2050
> 10% of electricity to be generated from renewable sources by 2010
> Developing a strategy to reduce emissions from the transport sector
> Improving communication of the climate change issue to all sectors
> Taking the lead on international climate policy

Achievements

> 15% reduction in greenhouse gases and 8% reduction in CO₂ on 1990 levels by 2003
> 4.64 million tonne reduction in greenhouse gases from direct participants in the first year of the UK Emissions Trading Scheme
> 13 million tonne reduction in CO₂ from industry sectors with voluntary agreements

Benefits

>Potential 35,000 jobs to be sustained by the renewables industry by 2020
>Cost savings for industry through energy efficiency
>Putting London at the heart of EU emissions trading

Low Carbon Solutions

Background

The UK’s commitment under the Kyoto Protocol is to reduce greenhouse gas emissions by 12.5% in the period 2008-2012, against a 1990 baseline. But the UK Government believes that Kyoto constitutes only a first step. When it launched its Climate Change Programme (CCP) in 2000, it therefore set a further target to reduce domestic CO₂ emissions by 20% by 2010. The 2003 Energy White Paper subsequently announced that the government would put the UK on a pathway to achieve CO₂ emissions reductions of 60% by 2050.

According to Chris Leigh, Head of National Climate Change Policy at the Department for Environment, Food & Rural Affairs (DEFRA), “Being a leader on climate change policy has a number of advantages. It can give us the edge in international climate negotiations. It also opens up various economic opportunities both in terms of energy efficiency and new technology markets.”

The UK government has implemented a range of measures to promote both energy efficiency and low-carbon technology development. The programme includes various innovative economic instruments such as eco-taxes and trading schemes. Some of the highlights are as follows:

Read about the Climate Change Levy under Energy Efficiency

The UK emissions trading scheme uses the same economic principle as ROC trading, to encourage both private and public sector energy users to reduce CO₂ emissions. The scheme was launched in 2002, with 31 ‘direct participants’ volunteering to make absolute annual reductions. As the first country to put in place such a scheme at a national level, and with a welldeveloped trading infrastructure in place, the UK is strongly positioned to capitalise on the EU trading scheme to be launched in 2005.

In the domestic sector of the UK, energy suppliers must meet Energy Efficiency Commitments. These are targets for energy efficiency which the suppliers can meet by encouraging domestic customers to install energy saving measures such as wall and loft insulation.

To improve energy efficiency in industry, the UK government introduced the Climate Change Levy (CCL), a tax on the business use of energy, in 2000. Revenue from the Levy is recycled back to business through foregone taxation, such as reductions in National Insurance Contributions, and through funding to The Carbon Trust, an independent company whose work includes advising business on energy issues.

To protect UK competitiveness, 44 energy intensive sectors have negotiated emissions reduction targets known as Climate Change Agreements (CCAs). When met, CCAs entitle companies to an 80% Levy discount. A DEFRA source says, “Industry has responded very well to the opportunity to pay less Climate Change Levy, much more so than the mere price effect of the Levy alone. Even those businesses who thought they had a good track record on energy management have seen that there are still gains out there to be made.”

To encourage the uptake of low-carbon energy options, fuel for combined heat and power and electricity generated from new renewable sources are exempted from the CCL. The UK government also provides direct grants for the development and demonstration of new technologies. For example, there is currently a renewables support programme worth £348 million over four years. Energy suppliers are also covered by the ‘Renewables Obligation’ (RO) which defines the amount of electricity which must be generated from renewable sources. Suppliers are able to trade Renewable Obligation Certifications (ROCs) to meet their graduated supply targets at the lowest cost.

The UK’s reduction programme has already resulted in significant emissions reductions. With CCP measures in place, emissions in 2010 will be about 517Mt CO₂, a reduction of approximately 14% on 1990 levels. According to Leigh, “In the UK, Tony Blair himself is committed to making climate a central issue during the upcoming UK presidencies of the EU and G8. This commitment has helped us to drive through policies which cut across government departments. Emissions are now on a downward trajectory. But further reduction policies are certain to be needed beyond 2010 if we are to maintain this trend.”

The UK recently announced that it would use the EU trading scheme to contribute towards the additional reductions required to meet the 20% domestic target. Looking forward, a key challenge will be to convince industry that plans to reduce emissions beyond Kyoto obligations do not put the UK at a competitive disadvantage. In fact, because the UK has acted early, it should be in a strong position compared to many other countries. Other priorities include building a strategy to reduce transport emissions, and overcoming barriers to growth in terms of renewables. For Leigh, “Progress in all areas will rely on clearly communicating the key issues. Probably the major challenge in the UK has been putting across the climate message, linking personal choices with our ability to do something about climate change. Organisations like The Carbon Trust have taken important steps, but there is undoubtedly more work to do.”

©Edward Parker