The Seventh Carbon Budget: UK’s removals needs are becoming clearer

Last Wednesday, the UK’s Climate Change Committee (CCC) published its Seventh Carbon Budget (CB7), covering the period 2038-2042. In the UK, the CCC is required under the Climate Change Act to publish carbon budgets for successive periods every five years, providing advice on total emissions budget and associated reductions needed towards the UK’s net zero goal. The advice is then put before parliament to be voted into law.??

The report is an invaluable reference point for the UK greenhouse gas removals (GGR, a term used largely synonymously with CDR in the UK) sector, outlining the needs and uncertainties surrounding a domestic GGR supply, and the role it is expected to play in UK net zero. Building on CB6, published in 2020, this latest report offers refined estimates on removals volumes, the make-up of the GGR portfolio, and the cost of delivery.??

At 394 pages, there’s a lot to digest over the coming weeks, especially with respect to the role of the land sink, but we’ve prepared a short overview on some of the key implications we’ve identified so far.??

So, what does CB7 say, and what are the implications for carbon removal?

The latest budget...?

• Clarifies the tightening window for emissions. CB7 sets an overall emissions budget of 535 MtCO2e, including international aviation and shipping. This budget entails an 87% reduction in emissions by 2040 compared with the 1990 baseline, in line with 2035 target of 81% outlined in the UK’s recent Nationally Determined Contribution submitted to the UNFCCC.??

• Estimates lower emissions in 2023. The Committee has lowered its estimated 2023 emissions compared with the Sixth Carbon Budget. This revised estimate is a result of emissions accounting changes in the agriculture, land use and waste sectors, as well as new forecasts for residential buildings and industry. These lower emissions estimates are carried through to lower residual emissions in 2050.?

• Outlines a reduced need for engineered removals in 2050. The result of lower residual emissions is a reduced need for engineered removals in 2050, which in turn is reflected in lower demand for removals pre-2050, as part of the ramp-up to net zero. An estimated 35.8 MtCO2e are required annually in 2050 under CB7, compared with 58 MtCO2e under CB6 (and compared with 75-81 MtCO2e as outlined in the 2021 Net Zero Strategy). Another noteworthy insight is that near-term GGR deployments are roughly half those foreseen in the UK’s 2021 Net Zero Strategy, with the indicative targets of 5 MtCO2/year GGR by 2030 and 23 MtCO2/year by 2035 contrasted with 2.6 MtCO2e/year and 12.7 MtCO2e/year in CB7.??

• Sets out a more stringent approach to biomass-based carbon removal. Deployment of BECCS in 2050 has dropped by 50% compared with CB6 – a result of lower overall GGR need but also limitations on the role of imported biomass, as well as a greater role for non-BECCS GGRs.?

• Envisions a shifting portfolio of GGRs. While BECCS represents 89% of engineered removals in 2040, by 2050 this falls as other methods grow in scale. DACCS increases from 8% in 2040 to 22% in 2050 – direct air capture without storage is additionally used to produce CO2 feedstocks for aviation and shipping fuels. The report also introduces a quantitative estimate of the role for biochar and enhanced rock weathering, where these were previously seen as speculative methods only. These methods grow from 3% of engineered removals in 2040 to 8% in 2050. Their grouping reflects the uncertainty around their relative roles.??

• Provides more clarity on who pays and which sectors most need removals. The CCC finds a need for GGRs in aviation, agriculture, industry, waste and other sectors, with aviation driving a large share of the CDR need (around 60% in 2050). Residual emissions from agriculture and land use are modelled as being offset by nature-based carbon sequestration. Overall, engineered removals address 43% of residual emissions in 2050, with the rest being balanced by the land sink. (This approach is broadly aligned with the “like for like” principle, where only durable removals are used to address fossil-based emissions, securing a high-integrity approach to net zero.) The use of GGR also impacts the pace or timing of decarbonisation in these sectors, because most GGR scale-up happens in the 2040s. In terms of deployment, energy, waste, and industry are expected to directly deploy GGR through BECCS, with electricity supply being the major source.??

• Offers data on the expected costs of GGR. Operating a GGR sector in 2050 will cost an estimated ￡4.7bn, primarily linked to the energy and maintenance costs of BECCS and DACCS. While CAPEX spending will be concentrated in the 2030s and early 2040s before tailing off, OPEX costs grow and then plateau throughout the 2040s; by the late 2040s GGR is one of the only sources of positive OPEX, with almost all other OPEX drivers diminishing towards zero or leading to savings. Spreading capital costs over the asset lifetime and combining these with operational costs puts the annual cost of GGRs at 0.2% of GDP in 2050.?

• Details a heavy focus on domestic action. The results (reductions and removals) outlined in CB7 are achieved entirely through domestic action, and do not involve international credits. However, CB7 highlights that DACCS sited abroad could drive cost reductions, though the side effects must be carefully considered. It is not recommended at this stage but not excluded from future use.??

• Outlines possible contingencies. If GGR technology does not develop as expected, demand management will be needed, particularly in aviation. On the other hand, accelerating GGR deployment is also presented as a contingency – either through more biomass imports or accelerated DACCS deployment.??

Conclusion

CB7 diverges a little from CB6 by only focusing on one emissions scenario (the “Balanced Pathway”) rather than exploring a range of scenarios as it has previously. This shift reflects the increased clarity around the options - “a narrowing in optionality in these areas and an increasing clarity on the best way forward for the UK”. One of the remaining areas of uncertainty is not the need for engineered removals, but the “exact form that these [removals] will take and their balance versus other measures”. What’s clear is that as we move towards 2050 and through successive carbon budgets, emissions reductions opportunities will narrow and engineered removals will occupy a larger share of the picture.??

Carbon Gap’s takeaway??Experts agree that the lower residual emissions (and lower GGR needs) set out in CB7 are a good thing. But the urgency remains to start meaningfully scaling UK removals. We remain far from where we need to be on removals and cannot afford further delays. Engineered removals represent 43% of mitigation in 2050, yet are deployed at no meaningful scale in the UK today. With the 2030 target for engineered removals likely to be missed, there’s a need for swift action to fill the gap and get the sector moving.??

The CB7 sets out the science, but how should that be reflected in the policy landscape? The UK is mobilising support through a number of key policies, like the GGR Business Model and the CCUS clusters programme – , but more is needed. Early action to demonstrate and improve technologies will drive critical cost reductions in CCS-enabled removals. Better evidence on the performance of enhanced weathering and biochar must be developed, to clarify their role and enable a market to come forward. Clearly, support for research and development, early demonstration, and longer-term commercialisation must be made available, to bring these methods through the innovation pipeline and advance a portfolio of GGR options. All the while, efforts to protect and enhance the land sink will also be critical. ?

In summary, removals represent a backstop mitigation option for specific sectoral emissions where no other option is available. But this should not imply they do not require attention today.? The report describes a limited, but very specific role for removals in sectoral decarbonisation, and outlines the contingencies if removals underperform in that role – which lead to further costs and trade-offs. CB7 reinforces the scientific, technological, social and economic case for investing in GGR at a time when it faces political headwinds. ?

By Francesca Battersby .