Today, I am laying before the House the draft Carbon Budget 7 Order which sets the seventh carbon budget for the period 2038 to 2042 at 535 MtCO2e (equivalent to a ~87% emissions reduction from 1990 levels). This budget represents the next interim target for the UK on the way to achieving net zero greenhouse gas emissions by 2050.

Against the backdrop of heightened geopolitical instability, including the ongoing crisis in the Middle East and its implications for global energy markets, the case for setting a clear and credible long-term pathway for the UK on clean energy and climate action is stronger than ever.

The Government has agreed with the independent advice of the Climate Change Committee (CCC) to set the budget at the level it has advised. This level has been chosen because it:

• Reduces the UK’s exposure to volatile international fossil fuel markets and protects bill-payers;
• Delivers the benefits of clean energy and climate action for jobs and growth, health and our natural environment;
• Aligns with the Paris Agreement’s 1.5°C goal to avoid climate disaster for future generations.

This level provides a clear basis and early signal for the pathway and pace of action required to remain on track for net zero by 2050.

Parliamentary scrutiny and transparency of the proposed Carbon Budget 7 level is important, and I support this through the publication of an accompanying Impact Assessment. The Impact Assessment sets out the evidence on the likely impacts of different carbon budget levels and the necessary investment required to meet them - much of which reflects upgrades to the UK’s energy system, homes and transport that would be needed in any case to modernise ageing infrastructure and meet future demand.

The Impact Assessment also shows that even under higher technology-cost assumptions, meeting net zero continues to represent value for money, with strong net benefits relative to alternative pathways. It concludes that the CCC’s recommendation for the seventh carbon budget is the preferred option, as the most credible and balanced option with the strongest overall case.

The detailed evidence in the Impact Assessment sets out how delivering this ambitious level is a major opportunity to improve people’s lives in the UK today, while protecting our children and grandchildren:

• Energy security and lower Bills: Clean power and electrification will significantly reduce our exposure to volatile international fossil fuel markets across the economy: by 2050, our economy’s overall dependency on fossil fuels will reduce from ~75% of our total primary energy today to ~15%. Electrification will also help consumers benefit from technologies that can cut their bills. Even before the Iran War, it was often cheaper to run a zero-emission vehicle than a petrol or diesel car and with the right tariff, running a heat pump can be cheaper than a gas boiler.
• Good jobs and growth: Clean energy and climate action is the economic opportunity of the 21^st century. Clean energy industries are already creating good jobs across the UK in roles ranging from offshore wind turbine technicians and solar panel installers to nuclear and grid engineers, heat pump engineers, and hydrogen fuel cell researchers. Earlier and more ambitious action generates reinforcing effects that reduce overall costs over time and strengthen long-term growth prospects.
• Improved quality of life and health: From warmer homes to cleaner air, decarbonising the UK’s economy will reduce air pollution and ease long-term pressures on the NHS. Improving air quality alone could deliver £80 billon of health-related benefits between now and 2050, avoiding between 39,000 and 119,000 life years lost from improved air quality in 2050, against a no net zero baseline.
• Protecting our natural environment: The climate and nature crises are fundamentally linked and contribute to each other. Reducing domestic emissions will contribute to restoring and protecting our wildlife, landscapes and ecosystems that provide our food and water. This will also help improve access to nature now and for future generations.
• Tackling the climate crisis: The UK has already helped drive global efforts to tackle climate change, including passing the world’s first Climate Change Act, which has been emulated by nearly 60 countries, and being the first major economy to legislate for net zero by 2050, helping drive a global shift towards net zero targets, which now covers 80% of global GDP. The UK’s climate framework has provided a model that others have followed, and domestic ambition strengthens our credibility and influence as we work with other countries to drive global action.

The Government is committed to meeting our carbon budgets in line with the Climate Change Act 2008. Existing Carbon Budget 6 delivery policies will drive substantial abatement into the Carbon Budget 7 period. The Carbon Budget Growth and Delivery Plan (CBGDP), published just last October, sets out a cross-government policy package to enable Carbon Budgets 4, 5 and 6 to be met up to 2037. These policies will continue to deliver the bulk of emissions savings needed for Carbon Budget 7. This provides a strong and credible starting point for Carbon Budget 7, reducing delivery risk and giving confidence that the transition can be delivered in an affordable and manageable way.

Environmental Audit Committee Inquiry on Carbon Budget 7

I would like to thank the Environmental Audit Committee (EAC) for its inquiry on the seventh carbon budget, which was opened in September 2025 following an invitation from government. The EAC recommended that the government accept the CCC’s recommended level for its seventh carbon budget. The government response will be published by the Committee soon after the laying of the CB7 Order.

The government’s response highlights the need for Carbon Budget 7 to combine ambition with deliverability, affordability and public confidence, underpinned by a robust evidence base. It welcomes the Committee’s report, sets out the positive case on public engagement and the government’s approach to delivery.

The pathway to deliver the carbon budget targets through to the seventh carbon budget will be set out in a future delivery plan, to be published as soon as is reasonably practicable after the budget level has been set. This statutory sequencing recognises the time needed to develop and agree an ambitious and robust package of policies to deliver the target.

I welcome Parliamentary scrutiny of the proposed level as an integral part of the democratic process for setting carbon budgets in accordance with the requirements of the Climate Change Act.