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A greenhouse gas (“GHG”) is an atmospheric gas which absorbs heat and warms the planet. The main ones are water vapour (H₂O), carbon dioxide (CO2), methane (CH4), nitrous oxide (NO2), ozone (O3), chloroflurocarbons and hydroflurocarbons. Carbon dioxide is the most common GHG that is emitted due to human activity. GHGs collectively can be expressed as a single number using the term “carbon dioxide equivalent” (CO2e).
The UK, as a signatory to the Kyoto Protocol, has accepted targets to reduce its GHG emissions. The Climate Change Act 2008 set a target to reduce the “net UK carbon account” by 80% (compared to the baseline of 1990 levels) by 2050. The net carbon account operates like a bank account; it is the net UK emissions of targeted GHG (excluding emissions from international aviation and shipping) plus and minus any carbon units.
Carbon units have a number of different forms. These are:
- Assigned amount units / AAU – these are allowances under the Kyoto Protocol to emit GHGs. AAU can be traded between international operators under Article 17 of the Protocol, so that a country which has exceeded its targets can buy capacity from a country which isn’t using its full amount. The relevant carbon market for the UK is the EU Emissions Trading Scheme.
- Certified emission reduction units / CER – these can be obtained under Article 12 of the Protocol, by sponsoring an emission-reduction project in a developing country. Known as the Clean Development Mechanism or CDM, this is a credit which can be counted towards meeting the country’s own targets. It can also be traded on the international carbon market.
- Emissions reduction units / ERU – these can be obtained under Article 6 of the Protocol, by participating in or investing in an emission-reduction project in a developed country. Known as Joint Implementation or JI, this is a credit which can be counted towards meeting the country’s own targets. It can also be traded on the international carbon market.
- Removal units / RMU – these can be obtained for land use, land-use change and forestry activities that absorb carbon dioxide, such as reforestation. They can also be traded on the international carbon market.
Capping the amount of GHG emissions is known as imposing a carbon budget, and is done for the UK every 5 years. The current carbon budget, covering 2018-2022, is set out in the Carbon Budgets Order 2009. A decarbonisation target range (a target range for the level of carbon intensity i.e. the amount of GHGs produced per unit of electricity generated in the UK) must be set alongside the carbon budget for 2028-2032.
Under the Climate Change Act 2008, the Welsh Ministers must report on the Welsh Government’s objectives, actions and future priorities regarding the impacts of climate change.
The Environment (Wales) Act 2016 introduced the target of an 80% reduction in the “net Welsh emissions account” (compared to the baseline of 1990 or 1995 levels) by 2050. This Act also requires interim emissions targets to be set for 2020, 2030 and 2040. The proposed interim reduction target for 2020 is 27%.
The net Welsh emissions account operates identically to the UK net carbon account, except that it describes only GHG emissions from sources in Wales. This includes emissions from international aviation or international shipping which are attributable to Wales.
The net Welsh emissions account operates differently to the UK net carbon account, in that the Carbon Accounting (Wales) Regulations 2018 only deal with the crediting of carbon units to the account. The debiting of carbon units operates on the basis of trading, which the UK on the whole participates in under the EU ETS. Wales does not have a separate trading scheme. The Welsh emissions account describes only GHG emissions from sources in Wales, including emissions from international aviation or international shipping which are attributable to Wales. For the purposes of the Welsh emissions account, a carbon unit is defined as a CER (obtained under Article 12 of the Kyoto Protocol).
The Environment (Wales) Act 2016 requires a Welsh carbon budget to be set every 5 years. The 2016-2020 budget is set at an average of 23% lower than the baseline, and the 2021-2025 budget at an average of 33% lower than the baseline.