Overview
On 29 October 2025, the Department for Energy Security and Net Zero ("DESNZ") published the Carbon Budget and Growth Delivery Plan (the "Plan")1– a policy framework setting out how the UK will meet its statutory Carbon Budgets 4 to 6, covering the period 2023 to 2037.
The Plan has been published shortly before states meet at the UN Climate Change Conference of the Parties in Belem (COP 30). One of the stated objectives of the Plan is to integrate the UK's national carbon budget with its international commitments on climate change mitigation, including the 2030 and 2035 Nationally Determined Contributions (NDCs) under the Paris Agreement. It also marks a renewed phase in UK climate policy, which combines emissions-reduction targets with a growth-oriented industrial strategy. It seeks to accelerate progress toward net zero by 2050, while strengthening energy security, lowering household bills, and positioning the UK as a global destination for clean-energy investment.
The focus of this plan is about the right incentives for people to benefit from clean energy. From electric vehicles to home heating, we want people to be better off from the shift to clean energy.2
What are carbon budgets?
Under the Climate Change Act 2008, the UK is legally bound to cap its total greenhouse gas emissions within successive five-year "carbon budgets." These budgets serve as interim milestones to ensure the UK remains on course for its long-term net-zero target. Each budget is set 12 years in advance based on recommendations from the Climate Change Committee and is legally binding, making them a central pillar of the UK's climate governance framework.
The UK is currently operating within Carbon Budget 4 (2023-2027) and is broadly on track to comply. Carbon Budget 6 (2033-2037) was set in 2021, and the level for Carbon Budget 7 (2038-2042) must be confirmed by June 2026. These legally binding limits provide the structural pathway for climate policy, shaping regulation, investment priorities and compliance obligations across the economy.
Why do they matter?
Carbon budgets translate the UK's long-term net-zero ambition into enforceable and intermediate targets, which create a structured pathway for emissions reduction. They shape government policy, regulatory frameworks and market signals, and also provide clarity and certainty for key stakeholders navigating the energy transition. The adequacy and transparency of previous UK carbon budgets have been subject to legal scrutiny in the English courts, with questions raised about their compliance with statutory requirements under the Climate Change Act.
What the Plan Proposes
The Plan outlines how the Government intends to deliver the UK's carbon budgets while driving economic growth and energy resilience. It consolidates over 300 policies and proposals across key sectors, such as power, industry, transport, heat and land use, which reflects a more integrated approach than previous climate strategies. Central themes include:
- Energy security and diversification: with continued emphasis on scaling up renewable generation, nuclear power and low-carbon hydrogen. The Plan identifies key national infrastructure priorities, including the delivery of Sizewell C in East Anglia and the expansion of carbon-capture and storage projects in the North West and North East, both viewed as essential to maintaining stable baseload supply and supporting industrial decarbonisation.
- Economic growth through clean technology: highlighting the UK's ambition to position itself as a global leader in green finance and net-zero innovation. The Plan forecasts the creation of 400,000 new jobs by 2030, underpinned by major investments in offshore-wind infrastructure in Wales and Scotland, grid upgrades and manufacturing of electric vehicle components.
- Transport and industry: the Plan also highlights measures to decarbonise hard-to-abate sectors, including aviation. The forthcoming Sustainable Aviation Fuel (SAF) mandate came into effect in 2025, requiring SAF to comprise 2% of total UK jet fuel demand, rising linearly to 10% by 2030 and 22% by 2040. The mandate is intended to stimulate innovation in advanced fuels, promote the diversification of feedstocks and reduce reliance on limited bio-based resources. Beyond its emissions benefits, the policy is designed to attract private investment in domestic SAF production facilities and to position the UK as a competitive hub for low-carbon aviation fuel production and technology.
Everyone knows there is huge momentum towards renewables and clean technologies like EVs globally, so this is also a plan for keeping pace with global markets.3
The Plan follows a period of legal and political scrutiny over earlier government climate strategies, which courts found insufficient under the Climate Change Act 2008. This iteration is therefore more data-driven and designed to be litigation-resilient, setting out clearer sectoral milestones, accountability mechanisms and evidence-based modelling to demonstrate compliance with statutory carbon budgets.
Financing and Investor Signalling
For the first time, the Plan is accompanied by a dedicated Investor Prospectus4 aimed at translating the UK's climate ambition into clear investment opportunities and financing pathways. The Investor Prospectus was developed with the Department for Business and Trade's Office for Investment and provides high-level guidance on where investors (from institutional financiers to infrastructure developers) can identify opportunities within the UK's net-zero transition.
In the coming months, DESNZ is expected to release a series of detailed sector factsheets, providing further clarity on policy interventions, timelines and anticipated impacts on power, heat, buildings, transport and industry.
For market participants, the Investor Prospectus signals a more transparent, partnership-based model for climate investment. It may potentially also inform due diligence and financing assumptions, particularly for long-term infrastructure and energy projects.
UK Methane Action Plan
Published in parallel, the UK Methane Action Plan5 complements the Carbon Budget and Growth Delivery Plan by focusing on reducing methane emissions domestically and internationally. It sets out actions across agriculture, energy and waste, which are sectors responsible for a significant share of the UK's methane output, and also reaffirms the UK's commitment to the Global Methane Pledge, which targets a 30% global reduction by 2030 from 2020 levels. Recent efforts include the UK being elected Co-Chair of the Climate and Clean Air Coalition alongside Brazil in February 2025, signalling a strengthened commitment to international collaboration, as well as the promotion of the use of Earth Observation technologies to improve the monitoring and verification of methane emissions, a move intended to enhance transparency and data-driven policymaking. Connections and comparisons will be drawn with the EU Methane Reduction Regulation (MERR), discussed here.
Conclusion
The Plan sets a clearer pathway for how the UK intends to meet its statutory carbon budgets while promoting investment and energy security. In the suite of documents accompanying the Plan, the Government has also published a report on "Unlocking the benefits of the clean energy economy"6, setting out the government's overarching strategy to reduce emissions to enhance energy security and create economic growth, as well as its response to the Climate Change Committee's Progress Report.7 Together, the Plan provides greater policy transparency for investors and businesses, particularly across the power, industry and transport sectors. However, delivery will depend on timely implementation of enabling regulation and funding mechanisms. It is important that organisations operating in affected sectors monitor upcoming DESNZ updates, which will define the detailed measures needed to achieve the UK's net-zero trajectory.
1 Source: Carbon Budget and Growth Delivery Plan, UK Government (October 2025) https://assets.publishing.service.gov.uk/media/6901d0c2a6048928d3fc2b55/carbon-budget-and-growth-delivery-plan-report.pdf
2 Source: Ed Miliband, 'Carbon Budget Delivery Plan published to meet targets of Climate Change Act', New Civil Engineer (30 October 2025) https://www.newcivilengineer.com/latest/carbon-budget-delivery-plan-published-to-meet-targets-of-climate-change-act-30-10-2025/
3 Source: Jess Ralston, 'Carbon Budget and Growth Delivery Plan', Energy & Climate Intelligence Unit (30 October 2025) https://eciu.net/media/press-releases/2025/carbon-budget-and-growth-delivery-plan-comment
4 Source: Investor Prospectus, UK Government (October 2025)
https://assets.publishing.service.gov.uk/media/6902045d918e1f940b3cf7d3/investor-prospectus.pdf
5 Source: The UK's Methane Action Plan, UK Government (October 2025) https://assets.publishing.service.gov.uk/media/6901f73a71b575684c3cf7ad/uk-methane-action-plan.pdf
6 Source: Unlocking the benefits of the clean energy economy (October 2025) https://assets.publishing.service.gov.uk/media/6900f929ab5cc9c893799502/unlocking-benefits-of-clean-energy-economy.pdf
7 Source: Progress in Reducing Emissions -2025 Report to Parliament: government response to Climate Change Committee (October 2025) https://assets.publishing.service.gov.uk/media/69010a44afec1781f77994fb/climate-change-committee-progress-report-2025-government-response.pdf
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