The UK Government has taken steps to enshrine in law the target of “net-zero” greenhouse gas (“GHG”) emissions by 2050. On 12 June 2019, the UK Prime Minister introduced into Parliament secondary legislation to increase the UK’s statutory domestic GHG emissions reduction target from 80% of 1990 levels to 100% (i.e., net-zero) by 2050.1 The draft legislation therefore adopts the UK Committee on Climate Change’s (“CCC”) recent recommendation2 that the UK target net-zero GHG emissions by 2050.
As explained in our previous alert on the implications of the CCC’s report, Section 2 of the UK Climate Change Act (“CCA”) provides that the percentage reduction target set out in Section 1 of the CCA may be amended by statutory Order. One situation in which such an amendment can be made is where there have been significant developments in scientific knowledge about climate change. It was on this basis that the Draft Order was introduced.3 Parliament will now vote on the Draft Order, which is likely to have broad support across both the House of Commons and the House of Lords. Once the CCA is amended, the UK would be the first G7 member state to set a 2050 net-zero GHG emissions target.
The Scottish and Welsh governments have also sought to implement the CCC’s recommendations.4 The Scottish Government is progressing a bill to adopt the CCC’s recommendation of net-zero GHG emissions by 2045.5 The Welsh Government, meanwhile, has accepted the CCC’s recommendation of a 95% reduction of GHG emissions by 2050, but has indicated an intention to go further and achieve net-zero emissions by 2050.6
Once the percentage reduction target in the CCA has been amended, policies will need to be put in place if the net-zero target is to be achieved. The CCC has advised that the Government should “ramp up” stable and long-term emissions-reduction policies to provide businesses, investors and consumers with certainty.7 As described in more detail in our previous alert, the CCC has indicated that the measures necessary to achieve these goals will include the widespread roll-out of low-carbon heating, a requirement that all new cars be electric by 2035 at the latest (and preferably by 2030), quadrupling the amount of low-carbon electricity generation by 2050, industrial use of carbon capture and storage, and the planting of 1.5 billion trees to remove carbon dioxide from the atmosphere.
Other countries are already taking similar legislative action. Norway, Finland and Sweden have already committed to carbon neutrality by 2030, 2035 and 2045 respectively.8 France has introduced draft legislation that seeks to implement a 2050 net-zero target.9 New Zealand has also introduced legislation for net-zero emissions by 2050.10 The EU is currently considering a 2050 net-zero emissions target.11
It is reasonable to assume that further countries will follow suit in adopting more aggressive emissions-reduction targets. The United Nations has convened a Climate Action Summit on 23 September 2019. The aim of the summit is for world leaders to consider “concrete, realistic plans” to implement more ambitious emissions-reduction measures, with the aim of reaching global net-zero emissions by 2050 and thereby achieve the temperature-limiting goals of the Paris Agreement.12
Given that the UK is almost certain to commit legally to the net-zero target in the near future, and given global trends in the area of regulation of GHG emissions, businesses in all sectors of the economy—particularly those making investment decisions with longer time horizons—would be well-advised to consider carefully the implications that the 2050 net-zero target and the CCC’s policy recommendations may have for them.
WilmerHale’s Energy, Environment and Natural Resources practice and its International Arbitration practice will continue to monitor and can advise on developments related to the Climate Change Act and the associated implications for businesses.
