The single most important element of the UK’s strategy is the Climate Change Act, which became law in November 2008.  It made the UK the first country in the world to have a legally binding long-term framework to cut greenhouse gas emissions and adapt to climate change.  It mandates action in the UK and abroad to cut GHG emissions by at least 80% by 2050 against a 1990 baseline.

The Act establishes a system of ‘carbon budgets’ that cap emissions over successive five-year periods to set out the UK’s trajectory to 2050. The first three carbon budgets (covering 2008-12, 2013-17 and 2018-22) were set out on 22 April 2009.  The Low Carbon Transition Plan was published in July 2009 and provided details of the strategy for achieving these ambitious targets.

The Act also created a new independent, expert body, the Committee on Climate Change, to advise Government on the level of carbon budgets and where cost-effective savings can be made. The Committee will submit annual reports to Parliament on the UK’s progress towards targets and budgets. The Government must respond to these annual reports, thereby ensuring transparency and accountability on an annual basis.

A low carbon economy requires low carbon industry.  The EU Emissions Trading Scheme covers around 50% of total EU emissions, covering mostly heavy industry sectors. The trading scheme will ensure that emissions savings are made at least economic cost.  The initial operation of the system was not ideal – it is clear now that too many permits were issued in the initial stages.  But changes agreed in December 2008 mean that the number of permits available will gradually be reduced so as to restrict emissions from these sectors by 21% by 2020 compared to 2005. By 2020, 60% of permits will be auctioned, helping to increase the incentives for action.

The Climate Change Levy is the UK’s energy tax, and was introduced alongside a number of complementary measures in 2001 following extensive consultation with business. The purpose of the levy is to encourage the efficient use of energy and provide incentives for the take up of renewable energy. The levy is a UK-wide tax on the use of electricity, gas and other fuels by business and the public sector. Domestic consumption of energy is not caught by the levy.

Alongside the introduction of the levy, the UK government agreed voluntary Climate Change Agreements between government and key industry sectors.  These enable energy intensive businesses to obtain an 80% discount from the levy, a tax on energy, in return for meeting challenging energy efficiency or carbon saving targets. There are currently agreements relating to 51 sectors, covering nearly 10,000 facilities.

Emissions from non-industrial activity are also significant.  The Carbon Reduction Commitment is a mandatory and auction-based ‘cap and trade’ scheme that applies to large commercial and public sector organisations in the UK including supermarkets, hotel chains and government.

In all of these areas, expert advice is crucial.  The Carbon Trust was launched in April 2001 to take the lead in improving business and public sector energy efficiency and to support the development of a low carbon economy in the UK. The Trust is a private company and operates independently, although it receives funding from the UK government. The trust works to deliver carbon savings in the business and the public sector by helping organisations to improve their energy efficiency.  They also promote the development of low carbon technologies through partnerships, funding, expert advice and large-scale demonstrations and provide direct financing support and set-up advice for low-carbon businesses.

Households account for 28% of the UK’s emissions.  The Carbon Efficiency Reduction Target puts the onus on energy supply companies to deliver measures in households that reduce emissions.  Many of these are subsidised by the energy companies, who can be fined if they do not meet their targets for promoting such actions.  Among its successes this programme has delivered insulation improvements in over 4 million households since it started in 2002.

As well as tackling emissions in existing homes, the government has also announced measures to ensure that sustainability is built  into our future through zero carbon standards for new buildings. The Government has committed to building all new homes to the zero carbon standard by 2016.  As steps to achieving this target, energy efficiency standards for new homes are to be improved by 25% in 2010 and 44% in 2013. It has also announced its ambition for all new non-domestic buildings to be zero carbon by 2019.

Behind both business and household emissions, the power sector plays a critical role.  Decarbonising the power sector is crucial to achieving the targets set. The Renewables Obligation is the UK Government’s main mechanism for supporting renewable electricity generation. The scheme works by placing an obligation on licensed electricity suppliers to source a specified and annually increasing proportion of their electricity sales from renewable sources, or pay a penalty.  The obligation for 2009/10 is 9.7% and is currently set to rise to 15.4% in 2015/16.