The UK’s new Labour government must urgently reinstate the net-zero plans shelved by its predecessor in order to “limit the damage” caused by Conservative policy rollbacks, according to official advisors at the Climate Change Committee (CCC).
In its latest annual progress report, the CCC issues some frank words about the “confusing and inconsistent” behaviour of the previous government.
The Conservatives only brought in “credible” policies to cover one-third of the emissions cuts required to hit the UK’s 2030 climate target, the committee finds.
Despite being “insufficient”, the CCC notes that this is a slight improvement on last year. Since then, a requirement for carmakers to sell electric models and a deal to help decarbonise heavy industry both boosted the credibility of the UK’s climate strategy, it says.
Nevertheless, the committee criticises former prime minister Rishi Sunak’s decision to roll back key net-zero policies, notably delaying bans on the sale of new gas boilers and non-electric cars. It says that, contrary to his claims, there was “no evidence” the delays would save people money.
The committee points to a general need to scale up emissions cuts across the economy. It says almost none of the UK government efforts to scale up low-carbon technologies or invest in nature-based solutions are on track.
With this in mind, the progress report lays out a selection of “priority” actions that the new Labour government should take to “make up lost ground” so the UK can achieve its climate goals.
- New government
- Policy gap
- Road transport
- Buildings
- Industry
- Fossil fuels and hydrogen
- Electricity
- Agriculture and land use
- Aviation and shipping
- CO2 removal
- Waste and F-gases
- Adaptation
New government
A lot has changed in UK climate politics since the CCC’s last annual progress report was published in June 2023.
Earlier this month, Labour won a landslide election victory ending 14 years of Conservative rule. The party triumphed with a manifesto full of climate-related policies, including a pledge to decarbonise the nation’s electricity supplies by 2030.
Under the Conservatives, the CCC had issued a series of progress reports in which it warned, again and again, that the UK was not on track to meet its future climate goals.
Rather than heeding these warnings, the government led by Sunak announced a rollback of net-zero policies last September, citing “unacceptable costs” for British people. This included delaying the phaseout of both gas boilers and petrol and diesel cars.
The CCC’s latest report acknowledges some positive progress made under Sunak’s leadership. However, it is also quite critical of the outgoing Conservative government, which it says “undermined” the government’s own climate efforts with “confusing and inconsistent messaging and actions”. The report states:
“[The previous government] claimed to be acting in the long-term interests of the country, but there was no evidence backing the claim that dialling back ambition would reduce costs to citizens.”
The new report was prepared before the election, but it says the new government must “act fast to hit the country’s commitments”. It highlights the reinstatement of the weakened net-zero policies as a priority, noting that “damage can be limited”, if the government does so “quickly”.
Interim CCC chair Prof Piers Forster told journalists in a briefing that the new Labour government, which has hired former CCC chief executive Chris Stark to lead its clean power by 2030 “Mission Control”, has already made some progress. He said:
“They’ve done some quite good things in their first 10 days…They have concentrated their announcements on decarbonising energy.”
However, to achieve the UK’s broader climate goals, he added that the new government would “have to go much wider than energy”, with efforts to cut emissions “right across the economy”.
In the coming months, the Labour government must produce a new net-zero strategy, following a second successful legal challenge, which concluded that the existing UK plan was not credible.
It is also obliged to produce a new international climate pledge (nationally determined contribution, NDC) under the Paris Agreement, laying out the UK’s ambition for cutting emissions out to 2035.
The government will also have to legislate in 2025 for the seventh carbon budget, covering 2038-2042, following advice from the CCC due early next year. The CCC describes the seventh carbon budget period as a “stepping stone” on the path to net-zero by 2050.
(See Carbon Brief’s “Interactive: Labour government’s in-tray for climate change, energy and nature”.)
Policy gap
UK greenhouse gas emissions have been falling steadily for years, largely driven by the phaseout of coal and the growth of renewable power. Last year was no exception, the CCC says – confirming Carbon Brief analysis published in March.
The nation’s emissions dropped by 5.4% from 415m tonnes of carbon dioxide equivalent (MtCO2e) in 2022 to 393MtCO2e in 2023, excluding emissions from international aviation and shipping.
This marked an increase in the rate of emissions cuts, resulting predominantly from a fall in gas demand that “may in part reflect continuing high gas prices”, as well as a return to normal levels of imports of clean electricity from overseas.
The UK also comfortably achieved its third carbon budget, which ran for the period 2018 to 2022, the CCC confirms. It notes that, rather than due to deliberate climate policy, this can partly be attributed to the UK’s “lower-than-expected GDP”, which, in turn, is linked to the economic impact of Brexit and the Covid-19 pandemic.
However, for years the CCC has been warning of a looming gap between the government’s net-zero policies and its future emissions targets.
Only one third of the emissions reductions required to achieve the UK’s 2030 NDC goal under the Paris Agreement of cutting emissions 68% by 2030 are covered by plans the CCC deems “credible”.
There is an even larger credibility gap on the sixth carbon budget for 2033-2037, with only a quarter of the cuts needed covered by “credible” policies.
The chart below shows the distance between these credible policies (dark blue) and the “delivery pathway” that the government has set out for achieving its net-zero target (red).
Policies with “some” (light blue) or “significant” risk (purple) close part of the gap to getting on track, but around one fifth of the emissions cuts needed are either covered by plans that are “completely insufficient” or have no plans in place at all.
The CCC notes a “slight improvement” in credible policies, which only covered a quarter of the 2030 emissions cuts last year. This is due primarily to the introduction of the zero-emission vehicle mandate and a deal for the electrification of heavy industry.
This is illustrated in the figure below, which shows the change in expected emissions in 2030 based only on “credible” policies. The dots on the left show what the CCC expected in its 2023 progress report, while those on the right show its latest estimates.
While the committee now expects emissions from road transport and industry to be slightly lower, the outlook for some sectors – notably buildings – has worsened following the Conservatives’ rollback of net-zero policies.
One of the ways in which the committee monitors government progress towards net-zero is with 28 “key indicators”. Of the 22 that have a fixed benchmark or target, only five are currently on track, including a reduction in distances driven by cars and a drop in battery prices.
None of the CCC’s 12 indicators for the uptake of low-carbon technologies and nature-based solutions are classed as “on track”, except for the expansion of public electric vehicle charging stations.
The CCC also set out 27 specific “priority recommendations” in last year’s progress report for the previous government to implement.
It says only two of these recommendations have seen “good progress” over the past year and 12 have seen no progress at all. Nine of the priorities where no progress was seen were the responsibility of the Department for Energy Security and Net Zero (DESNZ), which oversees most of the policies in question.
Progress was also “too slow” in the devolved administrations of Scotland, Wales and Northern Ireland, the CCC notes, with limited headway on their priority recommendations.
While there are “almost” enough credible policies in place to achieve the upcoming fourth carbon budget, between 2023 and 2027, the CCC warns that this should not lead to complacency.
Both the fourth and fifth budgets are relatively unambitious because they were set before the UK had a net-zero target, when the goal was an 80% cut in emissions by 2050. Both must be overachieved in order to remain on a “sensible path” to net-zero, it says.
The emissions drop in 2023 of 22.3MtCO2e was much higher than the average annual emissions cut seen in the seven years prior to this, which was 13.8 MtCO2e each year. The CCC notes that “a similar pace of reduction will need to be maintained throughout the rest of the decade” in order to meet future climate targets.
However, while emissions cuts to date have been dominated by the electricity system, other sectors will need to start contributing in the coming years.
As the chart below shows, three quarters of the emissions cuts over the next three carbon budgets are expected to come from transport, buildings and other sectors.
The CCC sets out various “priority actions” across the report in order to “make up lost ground” and get the UK back on track for its climate targets.
These include sector-specific targets, described in the sections below. They also include broader goals, such as making planning policy consistent with net-zero, publishing a just transition plan for workers and improving public engagement on low-carbon choices.
Road transport
Despite an increase in the miles driven on UK roads last year, emissions from cars and other road transport fell by 0.9%, according to the progress report.
The CCC says this marks the “first time that the uptake of electric vehicles has had a meaningful impact on the direction of emissions trends”. At least one million UK cars – 2.8% of the total fleet – are now electric.
In addition, the CCC notes that the number of miles being driven in cars remains roughly 6% below pre-Covid levels, indicating a persistent shift in travel patterns following the pandemic. (This is not the case for vans, which are being driven 11% more miles than before.)
Yet transport remains the largest source of emissions in the UK economy. The CCC stresses that emissions from cars, vans and trucks will have to drop four times faster than the 2023 rate each year this decade, in order to meet the country’s climate targets.
The report recommends various policies to achieve this. It welcomes the zero-emission vehicle mandate – which sets targets for car manufacturers to sell a certain share of electric models – as one of the few recent successes of the previous government.
However, it says that electric cars’ market share did not grow in 2023, after years of having exceeded the CCC’s expectations. It also notes that electric van sales have been stalling.
With this in mind, the CCC’s “priorities” for the Labour government includes a reinstatement of the 2030 phaseout date for petrol and diesel cars, after Sunak’s government delayed this to 2035. (Labour pledged to do so in its election manifesto.)
It also says ministers should remove planning barriers for electric vehicle chargers and develop new policies to promote electric van uptake.
The report welcomes the rapid drop in electric-vehicle battery prices, which have fallen far ahead of the CCC’s expectations, as the chart below shows. Their continued decline will play a “key role” in making these vehicles “more cost-effective”, it says.
Finally, the CCC recommends that the UK and devolved governments should publish various plans to guide local authorities in setting out local transport strategies, promote charging infrastructure and reduce the use of cars.
Buildings
In 2023, emissions from buildings fell by 7.2% due to reduced demand for gas. This continued a trend seen in 2022, which was driven in part by mild winter months and high fuel prices leading to behavioural change, such as people using their heating less.
However between 2015 and 2022, the average reduction in emissions in the buildings sector was below the pace needed for the rest of the decade to reach 2030 targets, the CCC says.
The reductions over the last two years were also not driven by sustained programmes to scale up low-carbon technologies, such as heat pumps, which the CCC says will be needed for “deeper decarbonisation of the economy”.
As such, progress must now be sped up, enabled by programmes of support to roll-out key technologies over the next seven years, the CCC says.
In 2023, the number of heat pumps installed only increased by 4% compared to the previous year, up from 58,000 to 60,000.
This indicator is “significantly off track” from the rate the CCC says is required. Installation rates in residential buildings will need to increase tenfold from 2023 levels by 2028 to meet the government’s 600,000 a year target.
However, the committee says there have been some “promising signs” in the first few months of 2024.
Applications under the Boiler Upgrade Scheme – which provides financial support for switching from a gas boiler to a heat pump – rose 62% in the first four months of the year compared to the same period in 2023. This follows a decision by the Conservative government to increase the grants available under the scheme from £5,000 to £7,500.
Meanwhile, measures to improve the energy efficiency of buildings are “moving in the wrong direction”. Rates of home insulation fell in 2023, having already been “significantly off track” in 2022, the CCC states.
Overall, the CCC’s assessment of policies to decarbonise buildings for the 2030 NDC has worsened over the last year. It points to the Conservative government’s decision to delay the phaseout of fossil-fuelled boilers, abandon plans to enforce energy efficiency improvements in rental properties and push back the introduction of the “clean heat market mechanism”.
The committee recommends reversing recent policy rollbacks as a priority. It also says the government should introduce a comprehensive programme to decarbonise public sector buildings, remove planning barriers for heat pumps and make electricity cheaper to support the electrification of home heating. (See: Electricity.)
Broadly, one of the priorities set out by the CCC is rolling out heat pumps faster, supported by strong and credible signals that policies such as the Boiler Upgrade Scheme will continue to be fully funded.
Additionally, the committee says the government should “narrow the scope” of the strategic decision on hydrogen for heat, ahead of its current deadline in 2026. The government has been set to make a decision on what the role of hydrogen will be within the heating system in Britain, however, multiple pilot schemes have now closed bringing the role of the technology into question. Ahead of this decision, the CCC suggests “prohibiting connections to the gas grid for new buildings from 2025”.
Industry
Emissions from industry fell by 8.1% in 2023. These reductions were largely the result of site closures in the chemicals sector, with high gas prices potentially a contributing factor, the CCC says. There was also a reduction in emissions in the iron and steel sector.
As with buildings, the sector’s annual emissions reductions over the previous seven years were not at a sufficient pace to achieve the UK’s 2030 climate target, the report says.
Moreover, last year’s fall was not the result of sustained decarbonisation action. The CCC says emissions cuts will need to speed up, supported not by factory closures but by the rollout of low-carbon technologies.
Between 2008 and 2022, direct industrial and fuel supply emissions fell from 140.8MtCO2e to 87.1MtCO2e, as shown in the chart below. This was “considerably faster” than the CCC expected in its 2008 advice.
This was mostly due to a fall in emissions-intensive industries’ outputs, in particular for steel and chemicals. The overall demand for steel saw a “big drop” from 2008 to 2009, and the sector has shrunk due to a lack of competitiveness internationally.
Additionally the EU emissions trading scheme (ETS) contributed significantly to abatement by encouraging further emissions reductions, the CCC notes.
The share of industrial energy use that comes from electricity has stayed relatively consistent, at 26%, since 2020. However, the CCC expects this to increase, as various industries electrify their processes to reduce emissions. As an indicator therefore, industrial electrification is off track, the report adds.
Risks to the decarbonisation of industry include British Steel’s plan to replace its blast furnace in Scunthorpe with two electric arc furnaces (EAF), which is dependent on as-yet unapproved government support.
The CCC notes that the previous government’s £500m deal with Tata Steel to shift production at its Port Talbot site to EAFs has lowered the risk of industry missing its decarbonisation targets.
However, this transition will mean up to 2,800 job losses. The CCC notes that it has “long been clear that the site would need to adapt to remain competitive, for economic reasons largely unrelated to decarbonisation, yet successive governments have failed to develop a long-term economic strategy to develop alternative high-quality employment in the area”.
It further advises that the government should be more proactive and ambitious when it comes to engaging with communities affected by the transition to net-zero. Not doing so risks long-term harm to communities, which could undermine support for net-zero.
The CCC says there has been progress with tightening the cap under the UK’s emissions trading system (UK ETS), which includes industry. However, it notes that the cap is still far looser than in the “central” trajectory in the government’s net-zero strategy. This means that other parts of the economy will need to cut emissions more quickly in order to keep the UK on track overall.
The new UK ETS cap is expected to lead to higher production costs, the CCC notes. While some industries will be protected if the government introduces a carbon border adjustment mechanism (CBAM) in 2027 as planned, this “could lead to offshoring in the absence of further supporting policy to develop alternative low-carbon options”, the report notes..
It says priorities for the new Labour government to tackle industry emissions therefore include strengthening the UK ETS to ensure that its price is sufficient to drive decarbonisation and implementing a CBAM effectively to protect against offshoring.
It also says the government should act to make electricity cheaper, develop policies to address barriers to industrial electrification and implement resource efficiency plans.
Fossil fuels and hydrogen
The CCC also weighs in on the question of whether the UK should continue to exploit its domestic fossil fuel resources, including those in the North Sea.
Specifically, it says that UK policy should be aligned with the COP28 deal on “transitioning away” from fossil fuels, as well as the guiding principle for international climate action of “common but differentiated responsibilities”. It says:
“As a developed country with a binding commitment to transition to net-zero, the UK should reassess whether further exploration for new sources of fossil fuels is aligned to the UNFCCC principle of common but differentiated responsibility and the global stocktake.”
The outgoing Conservative government had argued that domestic fossil fuels bolstered energy security, attempting to make this into a “wedge issue” with the now-ruling Labour Party, which ran on a pledge to end new licensing for North Sea oil and gas extraction.
To drive this point home, the Conservatives had introduced an offshore petroleum licensing bill that would have required the North Sea Transition Authority to run annual licensing rounds for new exploration. (The Conservatives failed to pass the bill before the election.)
In contrast, the CCC report notes that one of the key reasons why UK energy bills have remained so high during and after the global energy crisis is due to the country’s dependence on fossil fuels. This dependence will be reduced in the shift to net-zero, it notes.
The shift to domestic renewables will also bolster energy security, the CCC says:
“British-based renewable energy is the cheapest and fastest way to reduce vulnerability to volatile global fossil fuel markets. The faster we get off fossil fuels, the more secure we become.”
One “welcome” point of progress has been that in February 2024, the UK formally withdrew from the controversial Energy Charter Treaty, which provides protection to companies investing in fossil fuel developments, the CCC notes.
Beyond fossil fuels, the UK government has continued to target a strategic role for hydrogen. It published a hydrogen production delivery roadmap, a transport and storage networks pathway, and a business model for the first hydrogen allocation round in December 2023.
As a priority, the government should also publish a “strategic spatial energy plan” and identify low-regret infrastructure investments, including for hydrogen infrastructure that can proceed now, the committee says.
Electricity
Emissions from the electricity system fell by 22.2% in 2023. This large drop reflects falling gas generation as part of the longer-term rise of renewables, combined with a return to the UK’s normal status as a net electricity importer.
Electricity generation is the only sector to have sustained emissions cuts in line with the 2030 target over multiple years, the CCC notes.
With electrification of the economy a key enabler for wider emissions cuts, one of the CCC’s priority actions for the remainder of 2024 is for the government to make electricity cheaper, by removing policy costs from electricity bills.
This would support industrial electrification, the uptake of electric cars and ensure lower running costs of heat pumps compared to fossil fuel boilers, it says.
Electricity decarbonisation to date has been aided by massive cost reductions for technologies including wind and solar power, the CCC says. It adds that lower costs lay the groundwork for continued rapid uptake of low-carbon technologies.
Indeed, it says that renewable energy will need to be built even faster than it has been to date. Annual installation of offshore wind will need to more than treble, onshore wind more than double and solar increase five-fold between 2023 and 2035.
For example, the UK had 15 gigawatts (GW) of offshore wind at the end of 2023 and will need to add more than 5GW every year to reach 50GW by 2030. This is more than three times the rate added over the past three years.
The technology hit a stalling point in 2023, when no offshore wind was contracted in the contracts for difference (CfD) scheme due to failure to respond to supply chain cost increases.
The CCC says it has “some confidence” that contracts coming through under the CfD scheme will lead to capacity increases, “but these are not enough and significant additional capacity beyond this will be required”.
The CCC “welcomes” updates to the next CfD auction, including the 66% increase in the maximum price for offshore wind and an increase in the notional “budget” that includes £800m for the technology
Onshore wind capacity in 2023 was 15GW, however only 0.5GW of new capacity was installed last year. This was considerably below the peak of 1.8GW in 2017.
Total solar capacity was 16GW in 2023. For the UK to achieve the previous government’s ambition of hitting 70GW of capacity by 2035, more than 4GW would need to be installed each year, the CCC notes – more than five times the average amount added over the past three years.
Within its first week, the new Labour government has moved to make the development of renewables easier, including removing the de facto ban on onshore wind in England and approving three major solar farms.
Other key areas of development have been “positive steps” made by the previous government around whole-system strategic planning of the future energy system, the report says.
The CCC calls for rapid decisions to be made following the second consultation on the “review of electricity market arrangements”, which was published in March,.
The government should publish a strategy for the full decarbonisation of electricity by 2035 at the latest, the CCC recommends. (The report was prepared prior to the election. The new Labour government is targeting clean power by 2030.)
This strategy should cover the strategic and policy requirements, milestones and timeline for delivery, as well as contingencies addressing key risks, the CCC suggests.
Additionally, the government should ensure electricity network capacity is growing to meet requirements. This should include fully implementing the “connections action plan” and “transmission acceleration action plan” at pace.
Agriculture and land use
Agriculture and land use are the source of some major gaps in the previous government’s net-zero plans, the CCC states.
Emissions from agriculture have remained virtually unchanged for nearly two decades. Planting trees and restoring peatland could absorb some of the emissions from high-emitting sectors, but efforts to expand these activities have faltered.
The UK has committed to cut its methane emissions 30% from 2020 levels by 2030. In order to do this, the pace of reductions compared to recent years would need to double over this decade.
Cattle and sheep produce around half of the UK’s methane emissions. Given the slow rate of change over recent years, the rate of methane cuts from agriculture would need to increase roughly eightfold in order to meet the UK’s methane target by 2030.
The CCC notes that livestock numbers fell between 2017 and 2020, but since then the trend has remained flat. It notes that there has been a small amount of progress in the promotion of methane-suppressing feed products for livestock.
The committee also points out that the Welsh government has paused its plans to reduce emissions from farming “following substantial resistance”. It warns that any delay to its sustainable farming scheme “could have significant impacts”.
The report says both the UK government and devolved governments should prioritise funding and support to ensure the UK-wide tree planting target of 30,000 hectares per year by the 2024-25 period is met.
It also says there should be a “delivery mechanism” for peatland restoration, which is supposed to reach 32,000 hectares per year by 2026, but is not on track to do so. (The CCC notes that even this target is “significantly less ambitious” than its own recommendation.)
The final priority highlighted for the sector by the CCC is the publication of the long-awaited land-use framework. This plan has been repeatedly delayed, and could help to align the sector with other issues such as using land to build energy infrastructure or adapt to climate change.
Aviation and shipping
Aviation was the only sector that saw a substantial leap in emissions in 2023. They rose by 15.5% as demand “continued to rebound from the pandemic”, and the CCC says there is “a risk” that demand for flights may rise higher than pre-Covid levels next year.
The government’s pathway to net-zero allows for some growth in both aviation and shipping emissions out to 2030. (While domestic journeys are included, international aviation and shipping are not part of the 2030 NDC target. However, they will feature in the UK’s carbon budgets from the sixth period onwards.)
The CCC says more detail of policies for curbing aviation emissions was provided last year – specifically the sustainable aviation fuel (SAF) mandate. However, it says “delivery concerns” mean this sector continues to “attract some risks”.
It notes that the SAF targets the previous government set were “ambitious”, but cautions that the volume of SAFs available to meet this target is “highly uncertain”.
The CCC has frequently highlighted the need to manage demand for flights as well as implementing technological solutions to decarbonise travel. As recent Carbon Brief analysis demonstrates, any emissions cuts from the SAF mandate in the coming years will be entirely wiped out by the expected rise in demand for flights.
In the new report, the committee says a priority for the Labour government should be pausing any new airport expansions until there is a UK-wide “capacity management framework” in place.
This would assess aviation emissions and ensure there is no overall expansion “unless the carbon intensity of aviation is outperforming the government’s emissions reduction pathway”.
Shipping, which accounts for one of the smallest shares of annual emissions, is not highlighted as a priority area for the new government.
CO2 removal
The CCC says the previous Conservative government’s plans to develop technologies that remove CO2 from the atmosphere are “behind schedule”.
This makes the ambition to remove at least 5MtCO2 per year by 2030 – which is required to meet the UK’s NDC target under current plans – “increasingly challenging”, according to the committee.
Moreover, despite the publication of some business models for the sector, all of the government’s plans carry “significant risk”, the CCC warns. This is notable, as the removals sector is expected to contribute 11% of emissions cuts by the end of the sixth carbon budget in 2037.
The key priority the report highlights for the new Labour government is finalising business models for engineered CO2 removals and “opening these to the market to enable projects to get underway”.
A related piece of advice highlighted by the CCC is that the government should publish guidance for businesses on how to use carbon offsets. It says firms should only use them to claim “net-zero” once nearly all their emissions are cut, and “the remaining emissions are neutralised by high-quality permanent removals”.
Waste and F-gases
The CCC says there has been “very little progress” in cutting waste emissions. It highlights insufficient progress in capturing methane from landfills, recycling and composting.
Waste is largely a devolved issue and the CCC makes recommendations to the governments of Scotland, Wales and Northern Ireland accordingly.
The key priority that the report highlights for the new Labour government for this sector is the need to address rising emissions from waste-to-energy facilities, which have “substantially increased”. It calls for a “moratorium” on new plants until there is a government review of capacity needs and how these facilities align with climate plans.
Fluorinated gases (F-gases), which make up a tiny fraction of UK emission, are subject to steadily declining quotas for importers and producers of the devices that emit them. They are not targeted as a priority in the new report.
Adaptation
The previous Conservative government published its third National Adaptation Plan (NAP3) in 2023, covering the period out to 2028. This is the nation’s statutory plan to ensure the UK is prepared for a warmer world.
It has faced intense criticism from the CCC, and campaigners have taken the government to court, citing the plan’s failure to adequately protect people from climate change.
In its new report, the CCC says NAP3 “lacks the pace and ambition to address growing climate risks which we are already experiencing”. It says the plan needs “clear objectives and targets”, and this should include stronger links with the next spending review.
The report also says the government should reorganise so that adaptation “becomes a fundamental aspect and is embedded in other national policy objectives” across departments. This includes prioritising it in other national priorities, including nature restoration, infrastructure development, economic growth and health.
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CCC: Labour must ‘make up lost ground’ to hit UK climate goals
A major change in the way that China measures its core climate goal has effectively halved the growth in the country’s carbon dioxide (CO2) emissions over the past five years.
The revised measure of “carbon intensity”, the amount of CO2 per unit of economic output, implies that China’s emissions have only gone up by 7% from 2020-2025.
This is just half of the 14% rise indicated by previous official statistics.
On paper, the revision creates a gap of 700m tonnes of CO2 (MtCO2) per year, equivalent to the total emissions of Germany or South Korea.
While China has never officially defined how it measures carbon intensity, it has now made what appears to be a retrospective change, with the effect of making targets easier to meet.
The shift means that China officially came close to meeting its carbon-intensity target for 2020-2025, whereas official statistics had previously pointed towards falling well short.
The new definition of carbon intensity has not been made public, but plausible approaches to calculating the metric do not seem to be sufficient to explain the Germany-sized gap.
The apparent gaps or inconsistencies in China’s new carbon accounting also mean that China could meet its international climate pledges for 2030, even if its emissions go up, whereas the previous measure would have required them to fall.
This article explains how the metric appears to have shifted, what changes might potentially explain the revision and what the revised measure implies for China’s climate goals.
Measuring carbon intensity
Reducing carbon intensity – CO2 emissions per unit of GDP – has been China’s key climate commitment since the Copenhagen climate conference in 2009.
At that time, the country pledged to cut its carbon intensity to 48% below 2005 levels by 2020. This was followed up by a 2030 target of a 60-65% reduction, announced in 2014, which was then upgraded to more than 65% in 2021.
Since carbon intensity was made a key progress indicator in China’s 14th five-year plan for 2021-25, the country has reported reductions in carbon intensity every year in its statistical communique, issued at the end of February.
Neither China’s international climate pledges (its nationally determined contributions, NDCs) nor other official documents have ever set out a definition of carbon intensity, despite it being a cornerstone of the country’s climate commitments.
However, until this year, it was possible to closely reproduce the reported numbers, based on a straightforward interpretation of what carbon intensity means.
But the types of emissions that are included in the carbon-intensity metric have now changed.
Previously, it was possible to reproduce the reported carbon-intensity data by combining official GDP data with estimates of emissions from the use of fossil fuels. The latter could be estimated based on the officially reported consumption of coal, oil and gas, multiplied by China’s official emissions factors for the CO2 per unit of energy from each fuel.
The previous carbon-intensity measure apparently included emissions from the use of fossil fuels to generate energy, as well as their use as chemical feedstocks, so-called “non-energy uses”. However, it did not include non-fossil fuel CO2 emissions from industrial processes, such as the production of cement, as shown by the “old scope” in the figure below left.
Based on the annually reported progress against this old scope, China’s carbon intensity had fallen by a total of 12.4% from 2020-2025.
This was well short of the 18% target set for these years under the 14th five-year plan.
In September 2025, Huang Runqiu, head of the Ministry of Ecology and Environment, acknowledged this gap, saying that meeting China’s carbon-intensity targets had become “more challenging” due to the effects of the Covid-19 pandemic and trade tensions.
Yet the 15th five-year plan, published in March 2026, reported that China had cut its carbon intensity by 17.7% over the same period – just shy of the 18% target.
As such, it is clear that there has been a major shift in the way that China measures its carbon intensity, specifically in terms of which types of emissions are included.
Moreover, the revised numbers imply that – rather than missing it by a large margin – China officially came close to meeting its carbon-intensity target for the 14th five-year plan.
A footnote in China’s latest statistical communique offers a brief description of carbon intensity as relating to the CO2 emissions from “energy activities and industrial production”.
This indicates that the carbon-intensity calculation now includes industrial process emissions and excludes non-energy uses of fossil fuels, shown by the “new scope” in the figure above.
In comments sought by Carbon Brief, Ryna Cui, associate research professor at the University of Maryland School of Public Policy, who was not involved in the analysis, agrees that the changes to the carbon-intensity methodology are “unclear”. However, she notes that “limited data” makes it challenging to fully verify the nature and impact of the changes.
The revision mirrors a recent change made to the way that China measures its “energy intensity”, the energy use per unit of economic output. In 2024, energy intensity was changed to exclude non-energy use of fossil fuels and energy use from non-fossil fuels.
This exclusion also created a major incentive for expanding the chemical industry and the non-energy use of fossil fuels.
As for the change in carbon-intensity metric, this follows the highly energy-intensive pattern of economic growth during and after the Covid-19 pandemic and China’s “zero-Covid” policy.
Germany-sized gap
The shift in the way that China is measuring its carbon intensity has implications for estimates of the country’s emissions, which are only reported officially some years later.
Changes in carbon intensity and GDP are reported far more quickly – and can be used to estimate changes in China’s CO2 emissions.
China’s total emissions from energy and industrial processes were 11.2bn tonnes of CO2 (GtCO2) in 2020. Based on the originally reported changes in carbon intensity and GDP, its fossil-fuel CO2 emissions had grown 14% by 2024, an increase of 1,430m tonnes (MtCO2).
In contrast, the newly reported carbon-intensity figures imply that China’s CO2 emissions only grew by 7% between 2020 and 2025, up just 690MtCO2, as shown by the figure below.
The gap between these figures amounts to 730m tonnes of CO2 (MtCO2), equivalent to the annual emissions of Germany or South Korea.
On paper, therefore, the change in the carbon-intensity metric effectively halves the rate of growth in China’s CO2 emissions over the past five years.
Decoding the new carbon-intensity methodology
The change in the carbon-intensity metric could have other significant implications, explored below, making it important to understand how it is being calculated.
Yet, while there are some indications of what the new approach entails, these changes do not seem to account for the magnitude of the revision.
The new scope includes industrial-process emissions. One of the largest sources of these emissions, the cement industry, has been contracting due to a slowdown in real estate and infrastructure construction.
This reduction in emissions is one reason why China’s carbon intensity has improved more quickly under the new scope than under the old one.
In addition, the new scope excludes non-energy use of fossil fuels – largely relating to the chemicals industry – where there has been rapid growth over the past five years.
This is another factor in carbon intensity improving faster under the new scope.
Indeed, China’s chemicals industry drove more than half of the growth in its total fossil-fuel use in the past five years, including 40% of coal use and all of oil use. As a result, non-energy use reached 13% of the total consumption of fossil fuels in 2025, up from 7% in 2020, after growing at an average annual rate of 13%.
The figure below illustrates the impact of these changes in scope. It shows the change in China’s emissions from 2020-2025 due to the use of fossil fuels for energy, its industrial-process emissions and non-energy use of fossil fuels.
The first few rows show changes based on the consumption of fossil fuels overall, amounting to a combined 1,430MtCO2 rise in emissions.
This compares with the 690MtCO2 rise implied by the new carbon-intensity metric, leaving that Germany-sized 730MtcO2 gap in emissions. The new scope explains some of this gap.
In terms of industrial processes, the 30% fall in cement production could account for a 300MtCO2 fall in China’s CO2 emissions. In addition, the amount of carbon stored in products, such as plastics, asphalt and rubber, could account for an estimated 100MtCO2 fall in emissions.
On the other hand, emissions from the incineration of plastics increased by an estimated 40% and from metals industry processes by 10%, with aluminium production having expanded by 21%. Together, these would have increased emissions by an estimated 60MtCO2.
In total, the changes in emissions from fossil-fuel use, industrial processes, carbon retained in products and waste incineration add up to a combined 1,070MtCO2 rise from 2020-2025, shown in the penultimate row of the figure below.
Again, this revised total – based on the change in scope of the carbon-intensity metric – goes some way to explaining the Germany-sized gap in China’s CO2 emissions.
However, the new carbon-intensity figures imply that China’s CO2 emissions only increased by 690MtCO2, as shown in the final row of the figure below. This leaves a residual gap of around 380MtCO2, which does not appear to be accounted for by the data available.
One way to make the numbers add up would be to assume that the amount of carbon embedded in chemical-industry products has increased by the equivalent of 500MtCO2.
However, the reported output of major chemical-industry products cannot account for this level of embedded carbon. The figure below shows that the increase in output of major chemical products only explains around a 110MtCO2 increase in retained carbon.
Much of the increase in the production of plastics was cancelled out by a contraction in the use of bitumen for asphalt, due to lower road-building activity.
Furthermore, the 14th five-year plan for 2021-25 had a target of raising the share of waste incineration to 65% of urban residential waste treatment capacity, up from 45% in 2020.
So, while plastics production did go up, resulting in increased amounts of retained carbon, a larger share of this retained carbon was being incinerated, meaning its carbon would quickly be released back into the atmosphere.
One reason why carbon retained in products has grown more slowly than the amount of fossil fuels used in chemicals production is that the fastest growth has been in the coal-based chemicals industry.
Coal-based processes have a much lower conversion efficiency than oil- and gas-based production, with process emissions that are typically multiple times as high.
For example, these emissions are 10 times as high for the production of olefins – a key plastics feedstock – from coal as compared with oil or gas. The process is reported to require 3.75 tonnes of standard coal per tonne of product. This implies that only 30% of the carbon in the coal is retained in the product, with the other 70% being emitted in the process.
There are also chemical processes that use fossil fuels as a feedstock, but where the end product does not contain carbon. One example is ammonia, a key building block for fertiliser, where production grew by 52% from 2020 to 2025.
Neither the change in scope of the carbon-intensity calculation, nor the change in the amount of carbon retained in products, is sufficient to explain the size of the revision in the newly reported numbers. There must be another explanation.
There are two options. Either the new scope broadly aligns with what is outlined above, but also excludes a subset of the CO2 emissions. Or the scope does not exclude any of the CO2, but there are gaps in the monitoring of some energy or industrial-process emissions.
Either explanation would mean that China is not accounting for some of its CO2 emissions. It would also mean that the improvement in carbon intensity for 2020-2025 is over-reported.
China’s latest officially reported emissions inventories reinforce the second of the two options above, namely, that there are gaps in emissions reporting from the chemical industry.
From 2018 to 2021, the latest year for which China has reported on its emissions, the CO2 output of chemical-industry processes only increased by 13%. Over the same period, non-energy use of fossil fuels increased by 29%, according to data reported to the International Energy Agency by the Chinese government.
One factor in these apparent gaps could be that China’s National Bureau of Statistics (NBS) is required to publish data on carbon intensity very quickly, since it is a key indicator in the country’s five-year plans.
On the other hand, detailed greenhouse gas emissions inventories and energy statistics are only published years later, by the environment ministry and NBS, respectively.
What the change means for China’s targets
The change in the definition of carbon intensity has the effect of weakening China’s climate targets and introducing more uncertainty into tracking progress.
On the basis of China’s new numbers, it will require less effort to hit the 2030 target for a 65% reduction in carbon intensity on 2005 levels, as per China’s Paris pledge.
This target can now be met even if CO2 emissions go up between 2025 and 2030, whereas the previous metric would have required a reduction.
It will also require less effort to hit the 17% target in the 15th five-year plan.
The apparent gaps in the CO2 emissions numbers for 2025 could affect the delivery of China’s other key climate pledges, such as the commitment to peak CO2 emissions before 2030. They could also allow the chemical industry’s CO2 emissions to continue climbing rapidly, while still officially meeting the 2030 goals for CO2 intensity.
Moreover, the apparent gaps or inconsistencies in China’s new carbon accounting also mean that China would be able to officially meet its target to peak its CO2 emissions by 2030, even if its overall CO2 emissions do not actually reach a peak.
The apparent gaps could also affect the delivery of China’s newer target to cut its greenhouse gas emissions to 7-10% below peak levels by 2035 and beyond.
Nevertheless, researchers and analysts can still monitor progress by calculating China’s CO2 emissions independently.
China’s reporting on fossil-fuel consumption, the output of plastics and other carbon-containing products, as well as manufacturing of commodities with substantial process emissions, provides a basis for tracking emissions under the new scope.
While under the UN’s climate framework China is free to use any definition it wants to meet its own nationally determined climate pledges, retrospective changes to methodology or inconsistent accounting could erode the value of the country’s commitments.
Moreover, it will, ultimately, have to close any gaps in its emissions data and reporting, under the transparency rules of the Paris Agreement.
China’s next transparency report to the UN, due by the end of this year, should also provide more clarity on the methodology and data underlying the revised numbers.
This underscores the importance of monitoring, reporting and verification for industrial process emissions. “Mass balances” based on fossil-fuel consumption and product output could be used as a check on CO2 emissions reporting. Finally, China’s emissions data could also be made more granular and clearly defined.
Carbon Brief has approached the National Bureau of Statistics and Ministry of Ecology and Environment for comment.
The University of Maryland’s Cui tells Carbon Brief that in general, China’s climate goals are “improv[ing]” in terms of their coverage and scope. However, she adds:
“The issue is…the ambiguity and inconsistency in the coverage, definition and method between target setting and progress tracking, which can lead to large uncertainties and room for manipulation. It highlights the importance of transparency in national climate targets, following the UNFCCC’s international transparency framework, which should also be applied as best practices for domestic targets.”
About the data
The calculations in this analysis are based on China’s total coal, oil and gas consumption from energy statistical yearbooks covering the years until 2023, with data for 2024 and 2025 taken from the latest statistical communiques.
“Originally reported” CO2 emissions were back-calculated from carbon-intensity reductions and GDP growth given in annual statistical communiques. The revised emissions for 2020, 2024 and 2025 are similarly back-calculated from the reductions in carbon intensity from 2020 to 2025 and from 2024 to 2025, as reported in the 15th five-year plan outline and the 2025 statistical communique, respectively, combined with annually reported GDP growth.
Cement process emissions up to 2024 are from Robbie Andrews’ estimates, scaled to 2025 based on year-on-year change in total cement output.
Process emissions from the metals industry are based on calculating emissions for aluminium, silicon, lead, zinc and crude steel from the bottom-up, using industrial output data and IPCC default emission factors scaled to the reported total in 2021. For steel, the calculations are based on typical quicklime use in basic-oxygen and electric-arc furnaces.
Emissions from the incineration of plastics are based on a peer-reviewed estimate of plastics incineration in 2022, combined with growth rates in the overall power generation from waste-to-energy plants. The analysis assumes that the share of plastics in the energy content of the incinerated waste stayed constant over this period, which is a conservative assumption given the rapid rise in plastics production.
Total non-energy use of fossil fuels in 2020, 2024 and 2025 is available from an NEA data release, with data for 2021-2023 found in the China energy statistical yearbook 2025.
The mix of coal, oil and gas within non-energy use is based on the energy statistical yearbook data up to 2023, with the increase in coal in 2024 and 2025 based on Wind Financial Terminal data on coal consumption in the chemical industry. Gas use, which is relatively minor, is assumed to have grown on trend and oil is calculated as the residual.
Primary plastics, rubber, and urea output data are from NBS industrial statistics. The production of solvents, lubricants and waxes, as well as the use of bitumen in construction, is from energy statistical yearbooks. The analysis assumes no change in output from 2023 to 2025, given the lack of clear trends.
The post Analysis: China’s new carbon metric leaves Germany-sized gap in its emissions appeared first on Carbon Brief.
Analysis: China’s new carbon metric leaves Germany-sized gap in its emissions
At least 67 NHS hospital wards, departments and other sites across the UK have been forced to temporarily close or relocate due to weather-related flooding over the past five years, a Carbon Brief investigation reveals.
Maternity centres, surgical theatres, a neonatal intensive-care unit and even entire hospital buildings have been disrupted by heavy rainfall or encroaching floodwaters.
Carbon Brief submitted freedom-of-information (FOI) requests to 162 NHS trusts, which show that while many flood-related shutdowns were brief, some lasted for weeks or months.
In total, 148 trusts responded to these requests with reports of 67 flood-related shutdowns, giving detailed data for 30 incidents that resulted in a total of 3,000 days of closures.
Reports of flooding at NHS sites have been on the rise, according to NHS England data.
This comes as the UK experiences wetter winters, with periods of extreme rainfall that are increasingly linked to human-caused climate change.
These floods can exacerbate existing problems in a healthcare system that is already struggling with insufficient funding, old hospital buildings and a backlog of maintenance work.
Indeed, while there have been efforts to make UK hospitals more resilient to extreme weather, one expert tells Carbon Brief that such measures are difficult to implement when these institutions are struggling to keep their “heads above water”.
Rising floods
Floods pose a threat to people’s health, but they also threaten the UK’s healthcare infrastructure. Water can enter hospitals, paralyse ambulance services and damage equipment, placing strain on an already stretched NHS.
NHS records show that the number of flood incidents “caused by external weather events” in facilities across England has doubled since 2021, reaching nearly 400 in 2024-25.
Equivalent data is not available for Scotland, Wales and Northern Ireland, although there have been reports of floods disrupting services across the whole UK.
As global temperatures rise and the atmosphere holds more moisture, UK winters are getting wetter. Attribution studies show climate change has increased the severity of recent rainfall and flooding events – including Storm Eunice in 2022 and Storm Babet in 2023.
There is also a risk of increased flooding when heavy rain hits after periods of intense drought, of the kind seen in recent years.
Environment Agency modelling suggests that a rising share of medical facilities in England will be at risk of flooding due to climate change. It says the share of sites at risk will increase from a quarter in 2024 to a third by the middle of the century.
Despite this apparent threat facing the UK’s healthcare system, there is limited information about the extent to which these floods are already disrupting NHS services.
Closed services
To build a fuller picture of NHS-wide flooding, Carbon Brief sent FOI requests to 162 trusts and health boards – the organisations in charge of health services – across England, Scotland, Wales and Northern Ireland.
They were asked for details of wards, departments or services that had been temporarily or permanently closed due to weather-related flooding, such as river floods or heavy rainfall, between 2021-22 and the start of 2026.
In total, 148 of these bodies responded with details of 67 incidents in which weather-related floods have triggered closures. The map below shows where these incidents were located, from hospital wards in Scotland to an eye unit on the south coast of England.
The 67 flooding-related disruptions reported by NHS trusts and health boards is likely an underestimate. Many trusts told Carbon Brief they did not record such detailed information or that collating it would be too time-consuming.
Nevertheless, the results provide an insight into the kind of risks facing NHS services as weather gets more extreme.
Among the closures were 13 accident and emergency (A&E) departments, urgent treatment centres and minor injuries units. There were also 10 hospital wards, 10 surgical theatres, five maternity units and a neonatal intensive-care unit affected by flooding.
Many trusts did not provide information about how long each closure lasted. However, the 30 incidents where timespans were provided add up to the equivalent of more than 3,000 days – or eight years – of closures across NHS sites.
The infographic below provides a snapshot of some notable closures from the dataset.
The entire Buckland Hospital site in Dover closed for two days in 2025 amid “exceptional rainfall” and flash floods. People seeking radiology, maternity and urgent-care services were told not to visit over the weekend and various clinical services were delayed or cancelled.
The NHS declared a “major incident” in 2021 when flood waters “caused power outages impacting multiple areas” at Whipps Cross Hospital in north-east London – including its maternity service – for four days. Neighbouring hospitals also flooded.
Some closures lasted far longer. In Stroud General Hospital, a surgical theatre was closed for two weeks and an X-ray facility for around two months after storm water overflowed into the building in 2023.
Several NHS trusts stressed that the flooding incidents they reported were localised – often resulting from roof leaks exacerbated by heavy rain – and resulted in minimal disruption. Sometimes, as with a cardiology suite in Cannock Chase Hospital, the service was moved and the trust says patient care was not disrupted.
However, the responses also showed the breadth of damage such events can cause, including rainwater “pouring onto expensive equipment” and floods triggering the long-term relocation of services.
For example, Orchard Cottage, a site that provided care for adults with learning disabilities in Derbyshire, experienced major flooding during Storm Babet in 2023 and was permanently shut down as a result.
Adaptation needs
The UK Health Alliance on Climate Change, a group of UK health organisations, concluded in a report in 2025 that, with flood risks projected to grow, there is an “urgent need for adaptation measures” across the nation’s healthcare facilities.
Government advisors at the Climate Change Committee have highlighted the need for flood resilience in UK hospitals, including flood barriers, waterproofed electricals and built-in redundancy for critical areas, such as theatres, labs and IT equipment.
There have been various measures at both government and NHS level intended to improve the resilience of medical facilities to climate-related hazards.
The UK’s national adaptation programme sets out expectations for NHS England to “adapt NHS infrastructure to extreme weather events”. All trusts must have “green plans” in place, which require climate change to be factored into infrastructure decisions, for example, through the creation of drainage systems or green spaces.
Yet, as it stands, three-quarters of UK doctors say their workplaces are not prepared for the impact of extreme weather and nearly half of healthcare workers report that extreme weather has disrupted NHS services in the past five years.
Many hospitals have outdated infrastructure – often predating the founding of the NHS – which was not designed to cope with climate change. Prof Hugh Montgomery, chair of intensive-care medicine at University College London, tells Carbon Brief:
“The hospitals themselves weren’t built for this weather any more than anything else is really – and of course it’s going to get worse, in an exponential function.”
Many of the FOI responses provided to Carbon Brief identified specific building defects, such as roof leaks, which led to the flooding incidents during periods of heavy rainfall. There is a huge – and growing – backlog of maintenance work at NHS hospitals that was estimated in 2024-25 to need repairs costing £15.9bn.
Chris Naylor, a senior fellow at the King’s Fund, a thinktank focusing on health policy, tells Carbon Brief:
“Dealing with some of the backlog maintenance would probably help with climate adaptation as well, because of leaky roofs and all the rest of it. But we do also need to be thinking specifically about climate adaptation within the NHS and making sure there is funding for that.”
Montgomery points out that with trusts “mostly bankrupt” and most hospitals running a deficit, the question remains how to fund such interventions. “They’re struggling to keep their heads above water and they’re losing money,” he says.
Dr Mark Harber, a consultant nephrologist and special adviser on climate change at the Royal College of Physicians, tells Carbon Brief that hospitals at least need to make plans for extreme weather. This is particularly important for patients in need of time-dependent and life-saving treatments, such as kidney dialysis and chemotherapy.
Harber notes that hospitals, supply chains and transport could all be disrupted by floods:
“You have to have plans in place to deal with that, even if the NHS can’t deal with the flooding risk per se.”
Carbon Brief asked NHS England – which is responsible for the majority of the trusts that reported flooding disruption – for comment, but had not received a response at the time of publication.
Methodology
The list of incidents reported by trusts can be viewed here.
Carbon Brief sent FOI requests to 120 English NHS trusts that have reported any incidents of flooding since 2021 in NHS England’s Estates Returns Information Collection (ERIC) dataset. This covers around 60% of all English NHS trusts.
Carbon Brief also filed FOI requests with all 42 of the health boards and trusts in Scotland, Wales and Northern Ireland, which are equivalent to English NHS trusts.
All trusts and health boards were asked for details of wards, departments or services that have been temporarily or permanently closed due to weather-related flooding, such as river flooding or heavy rainfall.
This matches the wording used to describe a flooding event in the ERIC system, which requires the reporting of all flood events “caused by external weather events” that trigger a risk assessment by staff. Such external events are distinct from floods caused by other issues that are not related to the weather, such as burst pipes.
In total, 14 trusts did not respond and many more said they did not hold the data requested. Some trusts provided data, but on further questioning stated that the data they provided covered all flooding events and it was not possible to say which were related to weather conditions. These cases have not been included in the final dataset.
The post Revealed: Floods have forced at least 67 closures at NHS hospitals since 2021 appeared first on Carbon Brief.
Revealed: Floods have forced at least 67 closures at NHS hospitals since 2021
Adeline Rochet is a programme manager for the Corporate Leaders Group Europe, a business coalition driving the transition to a sustainable, competitive, and resilient economy convened by the University of Cambridge Institute for Sustainability Leadership (CISL).
Europe’s economy depends on the natural world functioning as it should, but the effects of climate change risk undermining increasingly delicate ecosystems. Talks about the European Union’s next long-term budget miss this fact.
Climate-related losses in the EU have already reached €822 billion since 1980, with a quarter of that damage concentrated in just the past four years. Ecosystems are under increasing pressure: more than 80% of protected habitats are in poor condition, soils are degrading and water stress is rising across the continent.
The latest state of the climate report by the EU’s Earth monitoring service Copernicus confirms this worrying state of affairs: 95% of Europe experienced above-average temperatures in 2025.
Economic exposure to nature-related risk is also growing. Businesses, banks and insurers are beginning to reflect this in their risk assessments.
So, will the policymakers in charge of developing the European Union’s next big budget integrate this vision? We are in the midst of finding out.
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Every seven years, the EU must negotiate a new budget that will help fund priorities over a seven-year-long period. The current one, which runs out next year, is worth more than a trillion euros.
Talks about the next multiannual financial framework (MFF) for 2028-2034 are now getting serious and the initial outline of this new budget shows it will focus on competitiveness, resilience and prosperity.
But, as the European Parliament adopted its negotiating position for the crunch budget talks and EU member states shape their approach ahead of a Council meeting on May 26, it is clear that the positioning of nature within this framework is strategically underestimated.
Why nature impacts economic growth
Back in 2022, France’s nuclear power output was severely affected when heatwaves drove up the temperature of the rivers used to cool atomic reactors, impacting other European countries too. This was particularly poor timing given the energy price crisis triggered earlier that year by Russia’s illegal invasion of Ukraine.
Low river levels caused by drought have also heavily impacted economic activity and growth in countries like Germany, due to the negative effect on inland trade, while degraded fields in the Netherlands combined with heavy rainfall have ruined potato harvests.
These examples show that we cannot detach the health of the European economy from the good functioning of nature.
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Nearly three-quarters of businesses in the eurozone rely directly on ecosystem services such as clean water, fertile soils and pollination. That dependency extends into the financial system, where around 75% of bank lending is exposed to companies dependent on these natural assets.
They entirely underpin supply chains and financial stability across the European economy. If load-bearing ecosystems collapse, businesses not only face disruption in their own operations, but they will also be exposed to failures from suppliers and customers.
This is not just a risk for individual companies, it is a threat for the whole system.
A budget that looks greener than it is
According to the latest proposals for the next MFF, a single 35% climate and environmental target will replace priorities that used to have distinct funding. As it stands, biodiversity has a 10% target, yet spending has struggled to reach even 8%, already showing how easily it is put to one side in practice.
In the new framework, biodiversity is absorbed into a broader category with no separate tracking or visibility. Dedicated instruments are folded into larger funding envelopes, and nature-based investments are placed in direct and distorted competition with industrial projects.
These are often faster to deploy and easier to measure, making them more attractive.
Headline figures reinforce some appearance of ambition, with €587–635 billion allocated to climate and environmental objectives. But since these are aggregated numbers, they do not show how much will reach ecosystem conservation or restoration.
Less visibility, weaker accountability
Biodiversity funding also remains structurally fragile, with around 80% concentrated in agriculture policy rather than supported by a diversified investment strategy.
This shift is structural: nature has been relegated from a defined priority to a mere discretionary allocation, and the governance model reinforces this dynamic.
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Greater reliance on National and Regional Partnership Plans (NRPPs) moves decision-making into national spending choices, where fiscal and domestic political pressure will likely mean long-term ecosystem investments struggle to compete with short-term economic demands.
The current MFF paints a worrying picture of structural triple risk for nature: reduced visibility, increased competition for funding and weaker accountability.
Nature is critical infrastructure
It is a point worth reiterating: investment in nature offers clear economic returns. Healthy ecosystems drive resilience by reducing exposure to climate damage and supporting local economic activity.
Public finance plays a decisive role in enabling these investments at scale, making budget design a question of risk management and capital allocation.
Nature-based solutions already perform essential economic functions. They regulate water systems, restore carbon sinks, provide a buffer against extreme weather events and support agricultural productivity.
These are characteristics of infrastructure. Energy systems, transport networks and digital capacity are treated as strategic investments because they underpin competitiveness.
Natural systems play the exact same role, so why does the current budget plan not reflect this?
The next EU budget will shape investment for the decade ahead. Its structure will determine how risks are managed and where capital flows. Nature cannot be erased in favour of competing short-term priorities.
In the upcoming negotiations, European leaders still have the option to treat nature as a structural objective and a core asset, supporting Europe’s resilience and long-term competitiveness. But they must act now, before it’s too late.
The post Nature cannot be ignored by Europe’s next big budget appeared first on Climate Home News.
https://www.climatechangenews.com/2026/05/25/nature-cannot-be-ignored-by-europes-next-big-budget/
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