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An announcement about a medium term UK emissions targets is expected tomorrow. There has been much speculation as to whether the Government will accept the [advice of the independent Committee on Climate Change ](http://www.theccc.org.uk/reports/fourth-carbon-budget “ccc”)regarding the 4th Carbon Budget. They recommended a relatively tight budget for years 2023-27: a 50% cut relative to 1990 (32% lower than 2009 levels). They also made a series of supporting recommendations about tightening the preceding budgets and making the majority of the cuts through domestic action rather than through offsetting.

The good news is the proposed 4th budget will most likely be accepted. The other recommendations look much less likely to be adopted. One reason for this piecemeal approach, in addition to Business Secretary Vince Cable and his Department’s opposition, is that UK carbon budgets are complicated by the EU Emissions Trading Scheme. This covers half of the UK’s emissions (electricity and heavy industry). Allowances to emit are handed out by Europe and companies caught by the caps are free to buy and sell their way to meeting them. The Government cannot therefore easily constrain offsetting in these sectors.
And the UK cannot therefore go further than the targets set by Europe without letting some other country get away with doing less.

What Europe’s targets will be in the 2020s cannot be known for sure but if current progress is anything to go by they will probably be too weak. The good news is if the UK’s budgets are tighter and we successfully meet them through domestic action then we could be net sellers into the carbon market – providing some revenue and a competitive advantage over our neighbours, even if it won’t deliver anything environmentally. It will also keep the price of carbon in Europe low and help to encourage tighter European-wide targets to be agreed.

It is really only in the non-traded sectors (transport and heat) that the Government has the power to set targets that go beyond Europe’s as a whole. However, these are the same sectors that have been largely ignored in climate policy to date and so are the hardest in which to deliver reductions. So tightening those parts of the existing budgets is perceived as particularly risky.

More efficient vehicles may be bringing emissions down slowly but if transport is really going to contribute to meeting that challenging 4th Budget and those that follow then a much more radical set of policies will be needed to incentivise car manufacturers and oil companies to start the process of changing our transport systems.

One solution to make the meeting of budgets much more certain, and therefore tighter budgets more likely in the future, would be to introduce a domestic cap on emissions for these sectors with the sellers of fossil fuels into transport and heat markets required to buy EU allowances to cover any excess emissions. The powers to introduce such a policy already exist in the Climate Change Act.

Having accepted the logic of tight budgets in the 2020s it’s now time the Government got serious about polices that will get us there.