Carbon budgets set a legally binding cap on the maximum level of emissions for a period of five years.  

In effect, a carbon budget is the amount of carbon that the UK has available to “spend” in a set time frame. Carbon budgets are set 12 years in advance through secondary legislation under the Climate Change Act 2008.  

The UK’s carbon budgets are being gradually reduced over time, with the aim of reaching “net zero” carbon in 2050. All of the UK must meet net zero by 2050, in line with the target set out in legislation. In addition to the UK-wide target, Scotland has set its own and is aiming to become a net zero economy by 2045. 

The UK has also committed to a 68% reduction in emissions by 2030, as part of its Nationally Determined Contribution towards the Paris Agreement1. 

Alongside these headline targets, the UK has set interim budgets which cap the emissions within different carbon budgetary periods. The current fourth carbon budget requires a 52% reduction in emissions by 2027, while the sixth carbon budget requires a 78% reduction by 2037. 

There have been 6 carbon budgets, covering 2008 to 2037, and the UK will set the seventh this year.  

Sixth carbon budget 

The sixth carbon budget, or CB6, was set in 2021, based on advice from the Climate Change Committee (CCC). CB6 is the first carbon budget to include emissions targets for the international aviation and international shipping sectors2.  

The scope of the emissions targets for aviation and shipping has not yet been defined and the Environmental Audit Committee has called for the government to introduce legislation to define what counts as emissions from international aviation and international shipping. 

As well as the carbon budgets, the UK has also made an international commitment through its “nationally determined contribution” to the Paris Agreement, to reduce emissions by 81% from 1990 levels by 2035. The government has said that this target aligns with the ambition required to deliver CB6 - reducing emissions by 77% from 1990 levels by 2037 4. 

Seventh carbon budget 

The seventh carbon budget (CB7) must be set by June 2026 and the details should be announced before that deadline. The CCC published advice to the government on CB7 in February (2025), which will set the government’s target for emissions reductions up to 2042, 8 years before 2050, the year that the UK has committed to reaching net zero. 

The CCC’s overall advice is that for the CB7, the emphasis should be on the "polluter pays" principle, indicating that businesses must either clean up their emissions or pay for durable carbon removal: 

• It also recommends balancing remaining emissions with carbon sequestration through land-based sinks and engineered removals for other emissions.  

• It calls for a rapid increase in heat pump installations, with the UK needing to install 380,000 low-carbon heating systems in existing homes by 2028 and 610,000 by 2030.  

• It recommends electrifying industry and transportation to benefit from global demand for low-carbon goods and reduce reliance on fossil fuels.  

• CB7 advice identifies low-carbon fuels, including sustainable aviation fuel (SAF) and shipping fuels, as playing a key role in sectors where electrification is not feasible5.  

The government set out its approach to meeting the carbon budgets in its Carbon Budget Delivery Plan in March 2023. In her speech on economic growth on 29 January (2025), the Chancellor Rachel Reeves committed to publishing a refreshed plan later in 20256. 

The CCC is responsible for assessing progress against the carbon budget  targets and publishes annual progress reports to Parliament. In its most recent report, the CCC found that the emissions reductions across most sectors need to significantly speed up to meet the UK’s climate targets in the 2030s7. 

Impact on businesses 

SaveMoneyCutCarbon advises that CB6 and CB7 will require businesses to drastically reduce their carbon emissions and transition to low-carbon practices to meet the UK's net-zero targets.  

This means a shift towards renewable energy, electric vehicles, and other low-carbon technologies, along with implementing carbon capture and storage (CCS) and carbon removals. The budgets also encourage businesses to develop action plans, set targets, measure, report, and reduce their emissions across all scopes - direct, indirect, and supply chain.  

Under CB6, the CCC acknowledges the energy sector's contribution to emission reductions and expects 75% of future reductions to come from other sectors8. The Energy Advice Hub notes that most large companies are already measuring and reporting their emissions8.  

Key sectors 

SaveMoneyCutCarbon advises that the UK Carbon Budget framework covers emissions across various sectors, including surface transport, residential buildings, industry, electricity supply, agriculture, and land use.  

Significant emissions reductions are expected across these sectors, particularly in transport and homes. The budget also addresses aviation, while land use changes and engineered removals are highlighted as crucial for meeting net-zero targets.  

CB7 focuses on: 

• Energy, including transport: electricity generation, heat production, and transportation, including both domestic and international travel.  

• Industrial Processes and Product Use (IPPU): industrial activities, including the production of goods and materials.  

• Agriculture: livestock farming, crop production, and land management practices.  

• Land-Use, Land-Use Change and Forestry (LULUCF): land management practices, deforestation, and afforestation.  

• Waste: waste disposal and treatment.  

• Surface Transport: road transport, including cars, trucks, and buses.  

• Buildings: heating, cooling, and electricity use in buildings.  

• Industry: manufacturing and construction.  

• Electricity Generation: electricity production from various sources, including fossil fuels and renewables.  

• Fuel Supply:  production and distribution of fuels.  

• Agriculture & LULUCF: agriculture, land-use, land-use change, and forestry.  

• Aviation and Shipping: international aviation and shipping.  

• F-gases: fluorinated gases used in refrigeration and air conditioning.  

• Greenhouse Gas Removals: through natural and engineered processes.  

Key recommendations 

The government has accepted key recommendations from the CCC, whose sector-specific recommendations address buildings and construction sectors separately. 

The government has also accepted the CCC’s advice that CB6 can be met through four key steps, which will affect businesses and other organisations as well as homes: 

1. Take up low-carbon solutions: Encourage widespread adoption of low-carbon technologies and practices. 

1. Energy efficiency measures: Implement and promote energy-saving measures in buildings, transportation, and industry.  

1. Fuel switching: Transition from fossil fuels to low-carbon alternatives, such as renewable energy sources.  

1. Behavioural changes: Drive shifts in energy consumption patterns through education, awareness, and incentives. 

For the buildings sector, the advice to meet the required emissions reductions focuses on reducing operational emissions by lowering energy consumption and improving energy efficiency.  

For the construction sector, suggestions to reduce carbon emissions include:  

• Increasing resource efficiency, for example by transitioning to a more circular economy. 

• Material substitution, e.g. switching to materials that create fewer emissions during their production.  

• Improving energy efficiency, for example by ensuring energy use during construction processes is not needlessly wasted10. 

   

Bibliography 

1”The UK’s plans and progress to reach net zero by 2050” (Accessed May 2025) https://commonslibrary.parliament.uk/research-briefings/cbp-9888/  

2 “What are carbon budgets?” (Accessed May 2025) https://commonslibrary.parliament.uk/what-are-carbon-budgets/  

3“Net zero and the UK aviation sector” (Accessed May 2025) https://publications.parliament.uk/pa/cm5804/cmselect/cmenvaud/404/report.html#:~:text=51.%20We,the%20United%20Kingdom 

4"”United Kingdom of Great Britain and Northern Ireland’s 2035 Nationally Determined Contribution” (Accessed May 2025)  https://unfccc.int/sites/default/files/2025-01/UK%27s%202035%20NDC%20ICTU.pdf  

5 “The Seventh Carbon Budget” (Accessed May 2025) https://www.theccc.org.uk/publication/the-seventh-carbon-budget/  

6 “Chancellor vows to go further and faster to kickstart economic growth” (Accessed May 2025) https://www.gov.uk/government/speeches/chancellor-vows-to-go-further-and-faster-to-kickstart-economic-growth  

7“2024 Progress Report to Parliament” (Accessed May 2025) https://www.theccc.org.uk/publication/progress-in-reducing-emissions-2024-report-to-parliament/  

8“Explanatory memorandum to the carbon budget order 2021” (Accessed May 2025) https://www.legislation.gov.uk/uksi/2021/750/memorandum/contents  

9“The 6th Carbon Budget: what does it mean for business?” https://energyadvicehub.org/the-6th-carbon-budget-what-does-it-mean-for-business/  

10 “Comment: The Seventh Carbon Budget” (Accessed May 2025) https://committees.parliament.uk/committee/62/environmental-audit-committee/news/205457/comment-the-seventh-carbon-budget/