Seventh Carbon Budget: the pathway to decarbonisation

“Our analysis shows that there is no need to pitch action on climate change against the economy. We will need government and business to deliver the investment, but we are confident that this Seventh Carbon Budget offers a secure, prosperous future for the UK.”

The CCC reckons that delivering against the pathway will result in:

• Cheaper bills: by 2050, if the pathway is delivered against, annual household energy bills are predicted to be ~£700 cheaper than today, and household driving bills are predicted to be ~£700 cheaper than today. The pathway includes investment and additional support for certain households
• Energy security: energy shocks have been responsible for over half of recessions since the 1970s. If the country decarbonises against the CCC’s Balanced Pathway and there was a spike in gas prices like the one following Russia’s illegal invasion of Ukraine, average household energy bills in 2040 would be 15 times less sensitive
• Private sector investment in infrastructure and new technologies: we estimate that the private sector funds on average 65-90 per cent of the financing requirement from 2025 to 2050. Public spend per year in our estimates never exceeds two per cent of total managed public expenditure.

Climate groups welcome the clear messaging coming from the CCC in its Seventh Carbon Budget and highlight the critical role cities and councils must play. Isaac Beevor, partnerships director at the nonprofit Climate Emergency UK, reckons the message is clear from the Seventh Carbon Budget and highlights the importance of local climate action. But he cautions this remains “inconsistent”.

The organisation works with residents and councils at a local level for council climate action and with others at a national level to advocate for further powers and funding for councils and communities for climate action. It will release its updated Council Climate Action scorecards in mid-June. 

“City regions like the West Midlands and London are leading the way, scoring 65 per cent in our Action scorecards while others fall behind – the average score overall being closer to 30 per cent,” he said. “The Greater London Authority is the only local government body with a climate statutory duty. To ensure increased and more consistent climate action we need to make sure every city and council in England has a climate statutory duty, and that this also comes with longer term funding and support from the UK government.”

“City regions like the West Midlands and London are leading the way, scoring 65 per cent in our Action scorecards while others fall behind – the average score overall being closer to 30 per cent”

Will Walker, UK policy lead at climate solutions charity Ashden, which works on climate solutions and policy relating to retrofit, community energy, nature-based solutions and schools, said the CCC’s report “provides welcome clarity”.

“Half of UK homes will be heated by heat pumps by 2040, with no role for hydrogen gas in home heating. This shift will cut emissions, strengthen energy security, and reduce household bills by £700 annually by 2050 – offering crucial relief for those in fuel poverty and struggling to pay rising energy bills again,” he said, stressing that retrofitting homes must be “a national priority” with long-term investment, local delivery, and job creation.

Ashden also calls for net zero neighbourhoods that combine retrofit, community energy, and nature-based solutions. “They are key to fair climate action, ensuring local engagement and benefits,” said Walker.

“It’s encouraging that the CCC recommends the Government lead by example with a public building decarbonisation programme, aligning with Ashden’s Let’s Go Zero campaign to decarbonise schools and create healthier, safer spaces.

“A focus on community-led nature-based solutions, including doubling tree planting by 2030, is also crucial to cut emissions, improve health, and build resilience.”

The CCC sector-by-sector breakdown of emissions reduction

27 per cent of the emissions reduction by 2040 comes from surface transport

The UK is already beginning to see EV sales have a measurable effect in reducing emissions. This will speed up over the coming years as prices fall and sales grow, with fully electric options accounting for nearly all new car and van sales by 2030 and making up over three-quarters of the fleet on the road by 2040.

14 per cent of the emissions reduction by 2040 comes from homes (residential buildings)

Supply chains and the workforce of trained installers for low-carbon heating should scale up through the 2020s so that all new and replacement home heating installations are low carbon (mainly heat pumps) by the middle of the next decade.

12 per cent of emissions reductions by 2040 comes from electricity supply

Demand for electricity will increase, especially during the 2030s, driven by the switch to EVs and heat pumps. To meet this growth and decarbonise the system, low-carbon generation is rolled out quickly. Offshore wind forms the backbone of the future system.

11 per cent of the emissions reduction by 2040 comes from industry

The largest share of emissions reduction comes from electrification of industrial heat processes. Carbon capture and storage is important for tackling process emissions and should be targeted at industrial subsectors with limited alternatives. Hydrogen will play a small but important role in subsectors which may find it hard to electrify.

7 per cent of the emissions reduction by 2040 comes from agriculture and land use

Low-carbon farming practices and technologies, including livestock measures and decarbonising machinery, can achieve a substantial reduction in agricultural emissions. Reaching net zero across the agriculture and land use sectors also requires a reduction in livestock numbers, most notably to free up land to plant trees.

5 per cent of the emissions reduction by 2040 comes from aviation

Growth in aviation demand is managed through ensuring that the cost of decarbonising aviation is reflected in the price of flying. The share of sustainable aviation fuel used increases gradually, with a growing portion of this coming from synthetic fuels in the 2040s.

24 per cent of emissions reduction by 2040 comes from other sectors

Emissions reduce across fuel supply, F-gases, non-residential buildings, shipping and waste. Engineered removals also ramp up gradually from 2030 to reach required levels by 2050.