The UK Low Carbon Transition Plan

The UK Low Carbon Transition Plan is a White Paper that is intended to provide a definitive statement of the policy by which the UK will achieve emission reductions of 18% on 2008 levels by 2020 (and 34% on 1990 levels) consistent with the five-year "carbon budgets" that have been set under the Climate Change Act 2008 (the Act) (see Herbert Smith e-bulletin A low carbon economy: The Climate Change Act 2008).

Approximately half of the forecast reductions would be delivered from a shift to lower carbon energy, 15% from improvements to domestic energy efficiency, 10% from lower emissions from industry, 20% from transport, and 5% from farming.

However, very few of the policies and measures to which the Transition Plan refers are new or are not covered in the associated Renewable Energy Strategy, UK Low Carbon Industrial Strategy and transport strategy documents. The Transition Plan serves more as a summary of existing proposals and the projected emissions reductions that each is expected to deliver. This is not altogether surprising given that the stated purpose of the Transition Plan is to satisfy a duty imposed on the Government by the Climate Change Act 2008 to publish a report on proposals and policies in place for meeting carbon budgets.

However, there is some disquiet that more would be expected of a White Paper, particularly in light of the media attention that has been promoted. Nevertheless, the Government has expressed confidence that the proposals identified in the Transition Plan will be sufficient to meet the carbon budgets set.

Emissions reduction estimates

The Transition Plan sets out the estimated carbon reductions that the Government forecasts that each proposal will deliver between 2008 and 2022. The total projected reductions are 13 million tonnes of carbon dioxide equivalent (MtCO2e) for the first carbon budget (2008-2012), 243 MtCO2e for the second carbon budget (2013-17), and 459 MtCO2e for the third carbon budget (20018-22). Although some disparity between the reductions that policies will deliver between different budget periods is to be expected (in particular resulting from the long lead-in time for renewables and new nuclear power stations), the disparity is very wide and may prompt concerns that not enough is being done to deliver more immediate reductions.

Cost estimates

The Government puts the total costs of the policies and measures identified in the Transition Plan at approximately £25 billion to £29 billion. It is clear that only a small proportion of these costs will be covered by public funds and that the private sector (and ultimately consumers) will bear the brunt of these costs.

Key policies and measures

The key proposals highlighted by the Transition Plan are set out below.

• Low carbon energy

• Renewables: According to the Transition Plan, 40% of electricity will be generated by low carbon sources by 2020. Electricity generated from renewable sources will increase to around 30% of total electricity generation by 2020, to be achieved mainly through enhancements to the Renewables Obligation and other policies addressed in the Renewable Energy Strategy.

• Nuclear: The Transition Plan refers to steps taken by the Government to streamline the planning and regulatory approval process for new nuclear power stations, but does not propose any new measures to facilitate or encourage the development of nuclear power.

• Carbon Capture and Storage (CCS): The Transition Plan also refers to plans to encourage the development of CCS, including the funding of up to four projects to demonstrate carbon capture at coal-fired power stations. These plans are the subject of a current consultation that was launched in June 2009 (see Herbert Smith e-bulletin Clean Coal: The UK moves forward with plans for capture and storage).

• Green homes

• CERT: Obligations on energy suppliers under the Carbon Emissions Reduction Target (CERT) to promote reductions in emissions from domestic properties will be increased by 20% between April 2008 and March 2011. The Government estimates that this equates to £3.2 billion of investment. This proposal was first announced in February 2009 and has been the subject of a recent consultation. However, the Transition Plan does confirm that following this consultation, it has been decided that the end date of CERT will be moved from April 2011 to the end of 2012.

• Zero carbon homes and building Regulations: Existing proposals to require new homes to be built to a zero carbon standard from 2016 (meaning that their net carbon emissions over a year will be zero) and to amend Part L of the Building Regulations to specify the minimum energy efficiency requirements for new buildings and certain categories of work to existing buildings are forecast to deliver some of the largest emissions reductions for any of the proposals identified in the Transition Plan (83.9 MtCO2e between 2008 and 2022).

• Other domestic schemes: The Transition Plan confirms that “pay as you save” schemes will be piloted to help people improve the energy efficiency of their homes with the savings made on energy bills used to repay the upfront costs. The Transition Plan also refers to the Renewable Heat Incentive and feed in-tariff proposals addressed in the Renewable Energy Strategy and the commitment announced in May 2009 that the use of smart meters in every home will be mandated by 2020.

• OFGEM's role: The Government will clarify that Ofgem as part of its role to protect consumers should help tackle climate change and ensure security of supply.

• Green industry

• Low carbon industries and green manufacturing: The Transition Plan claims that the UK can become a global centre for the low carbon and green manufacturing market and that by 2015 the UK's share of that market will be worth £150 billion per year. However, the proposals identified by the Transition Plan to achieve this goal are confined only to those covered by the UK Low Carbon Industrial Strategy and specifically the £405 million of public funding announced in the 2009 Budget.

• Industrial emissions: There are no new proposals to reduce industrial emissions with the Transition Plan suggesting that existing measures and proposals, including the EU ETS, the Climate Change Levy, and the Carbon Reduction Commitment, are considered adequate to deliver sufficient reductions.

• Green Transport

• Vehicle emissions and fuels: Emissions reductions from transport will mainly be delivered by improving the efficiency of conventional road vehicles delivered through compliance with EU mandatory targets for average carbon emissions from new vehicles (130g of carbon dioxide per kilometre phased in from 2012 to 2015, and 95g from 2020) and the Renewable Transport Fuel Obligation.

• Low carbon vehicles and trains: The Government will support the development of low carbon vehicles and fuels by supporting demonstrations of electric cars, help worth about £2,000 to £3,000 towards reducing the price of low carbon cars, up to £30 million to support the installation of electric vehicle charging infrastructure, and greater electrification and energy improvements across the rail network.

• Aviation and shipping: The Transition Plan refers to the Government's intentions to secure global agreement on reducing emissions from international aviation and shipping and the setting of a target to reduce UK aviation carbon emissions to below 2005 levels by 2050 despite forecast growth in passenger demand.

• Other proposals: The Transition Plan also refers to proposals to reduce emissions from farming (mainly by improving fertiliser efficiency, manure managements, and livestock feedings and breeding) and to reduce emissions associated with landfilling material such as food and wood that rots to release methane. However, these proposals do not appear to extend beyond advisory support and relatively small interest free-loans.

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

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© Herbert Smith LLP 2009