UK Proposes 87% Emissions Cut by 2040 Under Seventh Carbon Budget

The UK government has released its proposed seventh carbon budget, targeting an 87% reduction in economy-wide greenhouse gas emissions by 2040 relative to 1990 levels. The budget sets a cap of 535 million tonnes of CO2 equivalent for the 2038 to 2042 period and aligns with the UK's goal to reach net zero by 2050.

Energy Secretary Ed Miliband introduced the carbon budget to Parliament, emphasising that reducing dependence on fossil fuels would protect households and businesses from price shocks. Carbon budgets are five-year caps on greenhouse gas emissions required under the UK's Climate Change Act 2008, with each budget representing a legally binding limit. The UK has already reduced greenhouse gas emissions by approximately 54% relative to 1990 levels as of 2025, with the pace of reduction more than doubling since the introduction of carbon budgets in 2008, driven primarily by the expansion of renewable power and the phase-out of coal in electricity generation.

The 87% target aligns precisely with the recommendation made by the Climate Change Committee in its advice to the government. The CCC's analysis identified the need for significant emissions reductions across surface transport, buildings, industry and agriculture to meet the seventh budget's requirements. While the bulk of reductions through 2037 would come from the energy supply sector, the seventh budget period would shift the focus toward decarbonising buildings, transport and eventually agriculture and land use. The CCC estimated that despite substantial up-front investment requirements, the UK should begin experiencing net savings during the seventh budget period as fossil fuel technologies are replaced by more efficient, lower-cost electric alternatives.

Energy Secretary Miliband committed to releasing a delivery plan outlining the pathway to achieving the new targets as soon as practicable after Parliamentary approval of the budget. The announcement is expected to accelerate policy development across sectors including the rollout of heat pumps, the expansion of EV charging infrastructure and the electrification of industrial processes. For businesses and investors, the seventh carbon budget provides a longer-term policy signal that the UK's climate ambition remains aligned with a 1.5-degree trajectory, supporting capital allocation decisions for the period through 2040 and beyond.

Key figure — 535 MtCO2e — the UK's seventh carbon budget cap for the 2038 to 2042 period