UK Parliament Approves Seventh Carbon Budget, Setting 87% Emissions Reduction Target
The UK government has formally laid before Parliament the draft order establishing its Seventh Carbon Budget, committing the country to cutting greenhouse gas emissions by approximately 87% from 1990 levels over the five-year period running from 2038 to 2042. The budget has been set at 535 million tonnes of CO₂ equivalent (MtCO₂e), inclusive of the UK’s share of international aviation and shipping emissions — a significant shift in policy scope.
The written statement by the Secretary of State for Energy Security and Net Zero confirmed that the order covers the period from 2038 to 2042, set at 535 MtCO₂e, equivalent to approximately an 87% emissions reduction from 1990 levels. The government accepted the independent advice of the Climate Change Committee (CCC) in full, adopting its recommended level without modification.
The Government Response, published in early June, acknowledged that existing Carbon Budget 6 delivery policies will drive substantial abatement into the Carbon Budget 7 period, and that a detailed delivery plan will be published as soon as reasonably practicable after the budget level has been set.
The government’s own impact assessment concluded that meeting the budget would require around £880 billion in investment over 25 years, but that doing so would yield a net benefit of approximately £865 billion, with avoided fossil fuel costs alone projected to reach £445 billion over that period.
The announcement coincided with an independent report from the Energy and Climate Intelligence Unit, supported by analysis from the Confederation of British Industry Economics, showing that the UK’s net zero economy added £105 billion in gross value added to the economy in 2025 and now supports more than one million jobs.
The budget’s ambition extends beyond previous targets, in part because it now encompasses international aviation and shipping. On 14 April 2026, the government had already laid a statutory instrument to formally include the UK’s share of international aviation and international shipping emissions in Carbon Budget 6 and all subsequent budgets, bringing legislation into line with the government’s long-standing planning assumption.
CCC Chair Nigel Topping welcomed the government’s decision, urging an acceleration of electrification and, specifically, for electricity to be made cheaper as the primary mechanism for delivering the budget.
The pathway to delivery will centre on mass electrification across transport, heating and industry. The government must publish a full delivery plan after Parliament votes on the budget level. The deadline for that parliamentary vote is 30 June 2026.
Carbon market participants will be watching closely, as the budget’s ambition has direct implications for the future trajectory of the UK Emissions Trading Scheme, its potential linkage with the EU ETS, and demand for domestic carbon removal technologies.
