Environmental Law Service

Climate Law Database

What are the carbon budgets?

The carbon budgets fix the amount of GHG emissions for the whole state, for particular regions and for particular sectors of industry. These provisions will enhance the level of predictability for companies making long term investment decisions and actions to reduce their GHG emissions. Legally binding targets will constrain the discretion of policy makers to respond to changes in both the medium and long terms.

In the short term actual GHG emissions are affected by a large number of factors that can cause emissions to rise or fall unexpectedly, so the annual carbon budgeting which will fix the amount of GHG emissions is not the option. Instead, the core CCA`s framework allows unused amount of GHG emissions to be banked to the next budget so there are no legal consequences for high emissions in an individual year, as long as the aggregate emissions for the five year period do not exceed the limit set out in the budget.

The carbon budgets need to be flexible to allow lawmakers (or decision-makers) to respond to unexpected circumstances, even to amend the long-term targets. For example if significant changes (or developments) in climate science or in international law or policy occur. This could also result in large changes in the price of gas on international markets, or the pace of development in a new technology such as carbon capture and storage system.