Carbon budgeting

Sectors

How well are we doing?

Editor's note: We will soon be updating our policy comparisons and case studies to include our 12 newest countries: Germany, Serbia, South Korea, USA, Ethiopia, Australia, Spain, Italy, Nigeria, Turkey, Indonesia, Japan.

Carbon budgeting is a deceptively simple idea with profound implications. Just like any other budget, the idea is to set a fixed amount of carbon that a country is allowed to emit over a set period, and then work to keep within that limit. Scientists have worked out how much more carbon can be emitted globally to keep global heating below the 2°C target, or the 1.5°C ambition, in the Paris Agreement; country-level carbon budgets attempt to parcel out the planetary budget into national chunks.

As one of the most powerful tools available to fight climate change, it unfortunate that few governments have yet made efforts to set legally binding limits to national carbon emissions. For the 20 countries surveyed, carbon budgeting was amongst the very weakest policy areas, with over two thirds of countries having made no concrete progress at all. Though there are a few ambitious approaches to carbon budgets, no country has a gold-standard framework that commits it to Paris Agreement targets and is successfully driving economic decisionmaking.

South Africa hasn’t yet adopted a carbon budget, but proposals have been developed based on the country’s fair share of carbon emissions and its contribution to meeting the Paris Agreement. Similarly, China has incorporated a carbon budget management system into the 13th 5 Year Plan (2016-2020), which targets a compulsory 18.5% reduction in carbon intensity of GDP. The United Kingdom and France have the most ambitious policies, setting binding carbon budgets and independent monitoring bodies to keep governments on track. Sweden, Portugal and Costa Rica have mediocre ambition - not yet having pathways to national level or binding carbon budgets.

Burning so rapidly through the last dregs of our global carbon budget doesn’t just rob the chance of a safer climate future from our grandchildren, it loads the dice against them having a future at all.

Prof. David Reay
University of Edinburgh; responding to the Global Carbon Budget 2018 report

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About this policy

The challenge of carbon budgeting is in the details: setting the right budget, working out what that means for planning on an annual basis, deciding the package of policies and economic reforms needed to keep within budget, and then building strong institutions to ensure those policies get enacted. By setting a clear, legally binding targets, carbon budgets are both conceptually simple and politically difficult; it’s much easier to set a budget than it is to keep to one.

The unyielding logic of carbon budgets is one reason why some countries are reluctant to adopt them. More ambitious governments are discussing budgets, but may not have plans to implement soon or set budgets at levels that represent their share of staying within 1.5°C. For the strongest policies, it is the governance of the target that matters most – do the budgets come with a credible plan for delivery that recognises the need for green economic reform? And, most importantly, are the budgets legally binding with an independent watchdog in place to hold government to account?

Policy Description

Commit to legally binding carbon budgets that are consistent with NDCs and meet the Paris Agreement’s 1.5°C ambition.

Scoring Criteria

Legally-binding carbon budgets agreed and implemented in line with Paris Agreement’s 1.5°C ambition.
Carbon budget in place but not fully in line with Paris Agreement’s well below 2°C target.
Carbon budgets planned but not implemented, or inconsistent with meeting Paris Agreement 2°C target.
Carbon budgeting under discussion but no clear pathway to implementation.
No carbon budgeting proposals under discussion.

More ambitious?

Mandatory review of national budget and new policies for compatibility with carbon budgets.

Policy methodology

Case Study: United Kingdom

As recognised pioneers of carbon budgeting, the UK has developed arguably the strongest approach to carbon budgeting and governance. The 2008 Climate Change Act set out a framework of successive, legally binding five year carbon budgets to meet the UK’s obligations under the Paris Agreement up to 2050. Compliance with budgets, and recommendations for achieving them, is supported by the independent Committee for Climate Change (CCC). Despite this strong approach and success in keeping within budgets so far, the CCC is not able to prevent governments making policy decisions that will breach future budgets – only drawing attention to the implications that high carbon policies (e.g. airport expansion) have for the overall budget.

United Kingdom Country Profile