A journey of a thousand miles must begin with a single step, runs the Chinese proverb. And cutting greenhouse gas emissions drastically over the next 40 years will certainly require a long, arduous effort – but the government believes it made a genuine step forward in April’s Budget.

In his speech to Parliament, Alistair Darling formally announced that the government has adopted the first three carbon budgets recommended in December’s report by the advisory Committee on Climate Change, loudly advertising that in doing so, the UK has become the first country in the world to formalise binding limits on emissions over a set period.

The carbon budgets cover three five-year periods, taking the UK from 2008 up to 2022; by 2020 emissions are due to have fallen by 34 per cent from 1990 levels. And this, as optimists in both the government and campaign groups note, is an ‘interim’ target; the intended cut is 41 per cent relative to 1990, but this only becomes binding if a new global deal on emissions is reached at December’s UN Climate Change Summit in Copenhagen.

To the chagrin of many environmentalists, 40 per cent of UK emissions will come from high-polluting industries involved in the EU Emissions Trading Scheme (ETS). Allocated permits for a set level of emissions by their national governments, ETS participants can trade permits on an EU-wide market. So as long as emissions permits remain priced at their current low level, UK companies may find it more attractive to buy additional licenses to pollute than to invest in cutting CO2 emissions – leading to the prospect of our ETS industries posting figures showing an emissions reduction, while actual pollution levels continue to increase.

Outside the ETS, emissions will need to fall across the domestic economy – demanding action by a very wide selection of Whitehall departments. Notably, though, the aviation and shipping industries have so far been excluded from the budgets – another source of chagrin on the part of environmentalists.

Departments must first work towards the 2012 targets set by the first budgets. The Department for Energy and Climate Change (DECC), barely eight months old, will have lead responsibility for hitting the national target, and is currently preparing a white paper on the policies needed to meet the budgets. A spokesman for DECC says that it plans to publish the document, with a more detailed list of commitments by sector, in July. The young department is being urged to provide the most coherent strategy on domestic emissions reduction thus far.

David Kennedy, chief executive of the Committee on Climate Change, says the plans must “send a very strong message on the future in terms of decarbonising the economy”. But what demands are likely to be placed on individual departments, and on government as a whole?

DECC’s creation indicated at least a desire to create a more unified approach, and as well as overhauling Britain’s energy infrastructure – the biggest single contributor to emissions – the department will need to coordinate, if not corral, other parts of government. As its permanent secretary, Moira Wallace, noted in an interview with this publication earlier this year (see WWW, 24 February): “This will be a department with interfaces – and it ought to be, because it’s about changing the whole economy.” Notwithstanding the teething problems caused by integrating staff from two existing departments, there has been praise for DECC’s approach. Mike Childs, director of Friends of the Earth, says secretary of state Ed Miliband has been a “very positive” force in pushing the agenda within government.

Cross-department working

One of the government partners that DECC will have to prod is Communities and Local Government (CLG), which has responsibility for housing. In 2006, then-communities secretary Ruth Kelly launched a plan to make every new home zero-carbon by 2016, and CLG’s head of sustainability Bob Ledsome points out that all homes sold must now have an energy performance certificate rating its efficiency. However, Professor Tim Dixon of the Oxford Institute for Sustainable Development says there needs to be a more aggressive strategy to make existing homes more efficient. “There is a danger that CLG has focused too much on new buildings – domestic and non-domestic – which still only accounts for one per cent of overall building stock,” says Dixon. “There is a pressing need to focus on existing buildings or legacy stock and put in place key measures which legislate and incentivise users of buildings to change their behaviour.”

Mike Childs of Friends of the Earth agrees, and points out that an immediate drive to properly insulate homes and workplaces across the country would provide employment at a time of recession. “You can’t insulate homes with computers or robots, so in terms of an economic stimulus it’s great,” he says.

This agenda, however, brings us back to DECC, which oversees the government’s Carbon Emissions Reduction Target – a tax on energy providers used to subsidise energy efficiency in existing homes – and the energy markets. Progress towards increased use of Combined Heat & Power and micro-renewables has been slowed by regulatory structures tuned to the needs of major, existing energy suppliers, while the traditional, regulated energy market incentivises companies to increase energy sales volumes rather than boost energy efficiency. DECC now has the remit to address these policies, which were inherited from its predecessor the Department for Trade & Industry – but at this point in the political cycle, there is little enthusiasm for serious reform of our energy structures.

The introduction of large-scale renewables makes a better fit with current energy suppliers and our existing energy grid – but while David Kennedy of the Committee on Climate Change says the development of renewable energy is “fundamental”, he fears that the government lacks a proper policy framework.

The UK is committed to generating 15 per cent of its power from renewable sources by 2020. But while the Budget reported that new renewables funding from the European Investment Bank is being made available, private investment has been hit by the falling oil price, high grid connection fees and the lengthy delay of many projects at the planning stage. Given the state of the public finances, the prospects for more public cash look weak, says Alex Bowen, an adviser to Nicholas Stern’s landmark report to the Treasury on the economics of climate change: “There is a problem [with infrastructure investment] in the longer term, because governments of whatever hue are going to have to impose greater fiscal discipline.” And Bowen adds that the renewables obligation – which insists that suppliers source a quantity of electricity renewably – is only fulfilled as far as is legally required, and little more.

Underlying tensions

Bowen also highlights an apparent inconsistency between the emissions-reduction objective embodied in the carbon budgets, and the decision to proceed with a new coal-fired power station at Kingsnorth in Kent. However, the government has suggested the site could host one of the world’s first operational facilities using carbon capture and storage, whereby carbon is sequestered, transported and stored underground; more details are expected in DECC’s white paper. Despite the objections of many environmentalists, fossil fuels look set to remain a key element of energy policy.

Similar tensions are present in the debate over transport policy and its contribution to cutting greenhouse gasses. For green campaigners like Mike Childs, horrified by the dramatic rise in transport emissions, the Department for Transport (DfT) appears culturally programmed to simply increase supply. “The philosophy at the DfT is about satisfying demand for increased mobility, providing more roads and airports,” he says. “Climate change is barely on their agenda.” It’s a suggestion the department disputes, and David Kennedy says the DfT has realised that a “new era” has begun. “I think they are working towards a convincing strategy,” he says. “They still have some distance to go.”

Many observers want that new strategy to herald a move away from increasing supply in emission-heavy sectors such as aviation and roads. Although the planned third runway at Heathrow would only open in 2019 or 2020, at the end of the period of the first carbon budgets, critics are frustrated at the decision to proceed and the aviation’s exclusion from the budgets. “It’s difficult to see quite how the decision on Heathrow fits in with the medium-term objectives on emission reduction,” Alex Bowen says. The Committee on Climate Change, which also monitors government policies, has not yet stated its view publicly but David Kennedy says it is currently reviewing the Heathrow decision and the wider issue of the exclusion of aviation. “Do people need to travel less? I think that’s an open question; we don’t know yet,” he says.

However, Kennedy is convinced that one transport innovation does needs promotion: the electric car. He says that coordination across departments – the Treasury, CLG, DECC and the Department for Business, Enterprise & Regulatory Reform – is essential to ensure the developing technologies are supported, that the cars are affordable and that streets have the necessary charging points. “The government has to put in place a set of arrangements so that people are comfortable buying electric cars,” Kennedy says. “That’s about subsidy and about infrastructure.”

It’s clear that hitting the carbon budgets will require full engagement and buy-in across Whitehall – not least from the Treasury. According to Alex Bowen, himself a former Bank of England official, winning over the finance department to the climate-change cause is vital when such dramatic economic changes are required. He says the Stern Report, which focused on the economics of the problem, had “a lot to do with” stimulating the Treasury’s closer interest in climate change; campaigners are hoping that the Treasury’s strengthened interest will translate into cash, though there is scepticism given the financial climate. “The Treasury is now effectively closing its wallets to any bids [for money],” Mike Childs says, “except on the electoral battlegrounds of health and education.”

Elections may come and go, but the level of the UK’s carbon budgets are now set in law. If December’s Copenhagen conference leads to a substantive international agreement on emissions reduction, then within 13 years emissions will have to drop by about a third relative to current levels, and over 40 per cent relative to 1990. Achieving such cuts will demand a concerted approach by a multitude of departments and agencies, led by DECC but with a solid buttress of economic support from the Treasury. And progress will be closely monitored, according to the climate change committee’s David Kennedy. “We will say to them what we think needs to be done, and if [the government] is not on the same page, we will be pushing them.”