On 29 October, the government published its Carbon Budget and Growth Delivery Plan, outlining how it intends to meet carbon budgets 4-6 – from 2025 to 2037. We are currently in Carbon Budget 4.
The long awaited plan has had a complex journey. First published as the Net Zero Strategy in 2021, it was ruled unlawful in 2022. A revised version Carbon Budget Delivery Plan followed in March 2023 and was later likewise ruled unlawful in May 2024.
The High Court ordered the government to produce a new plan by 29 October 2025 hence the Carbon Budget and Growth Delivery Plan. Under the Climate Change Act, The UK is legally required to set -five year carbon budgets and once approved by Parliament, outline how they will be delivered.
The Plan titled “Unlocking the benefits of the clean energy economy” reflects the Labour government’s mission to ‘make Britain a clean energy superpower’ and recognises where most progress on emissions reduction has been made.
The government's central narrative is that consumers have been paying a “fossil fuel penalty” due to the UK’s dependence on volatile international fossil fuel markets. The solution therefore is to “take back control” by investing in homegrown renewable and nuclear energy - which will (1) lower energy bills, (2) create jobs, (3) improve quality of life. With and (4) “protect the natural environment”. These are the 4 central themes of the Plan.
The Plan highlights actions the government has taken, to show they are progressing:
- Lower energy bills: Highlights include the investment decision to build Sizewell C in Suffolk as well as investment in nuclear fusion and small modular reactors. Reforms were made to the Contracts for Difference scheme (Allocation Round 7 auction) – which, as we have heard from members, was in need of reform. Record amounts of clean energy have been consented. It is noted that hydrogen will have a role to play in hard-to-electrify sectors, and that oil and gas will continue to play an important role whilst we work on developing new technologies.
- Jobs and economic growth: The government published key documents this year, namely the Industrial Strategy with the Clean Energy Industries Sector Plan and the Clean Energy Jobs Plan. However, there is no mention of the wide range of skills and jobs that will be needed to support the transition, beyond clean energy. Electrification and bringing down industrial energy prices are highlighted priorities when it comes to government action to support UK business and stimulate growth.
- Improving quality of life and health: Beyond clean energy, the Plan also mentions better and cleaner transport as a central part of the government’s aim to improve quality of life. It explicitly calls out the health and economic impacts of air pollution. Support for zero-emission vehicles, including investment in public chargepoints, is a key policy here, along with steps to decarbonise aviation. The latter will be key to enabling the government’s plans for airport expansions. It is also noted that the government will shortly publish their Warm Homes Plan which will kick off the country’s biggest programme of home upgrades in generations.
- Protecting the natural environment: Another critical non-energy-related area of action in the Plan is nature. The government explicitly recognises the interlinked nature of the climate and nature crises – which ACE Group has asked for in our Manifesto. It also notes that “natural capital is the foundation of resilient economic growth” and the economic value of our natural assets. The Plan emphasises investments in tree planting (£816 million through to 2030) and peatland restoration (£85 million by 2030).
Whilst the bulk of the Plan focuses on energy, it is important that government increasingly shifts its focus away from energy decarbonisation and onto other areas (such as land use) if it is serious about reaching net zero by 2050 – as we have been told by the Climate Change Committee.
Lastly, plan acknowledges the Climate Change Act as a key driver of investment and decarbonisation and the UK’s climate leadership, noting that 60 other countries have since adopted their own climate legislation. with the UK contributing 1% of global emissions, the plan emphasises the need for us to work with others to drive action globally. This is especially relevant with COP30 currently underway.
Next steps
The government must now implement the policies listed in the Plan and set Carbon Budget 7. The Climate Change Committee (CCC) published its advice for the 7th Carbon Budget (2038 – 2042) earlier this year, and the government has until 30 June 2026 to accept it or propose a different level. This will then have to be approved by Parliament. The CCC has recommended that the government publishes its proposals and policies for meeting the budget ahead of the vote in Parliament.
If you have any comments and feedback on the Plan, please contact the ACE Policy team at policy@acenet.co.uk. We would love to hear from you.
