Carbon Budgets : Seventh Report of Session 2010-12, Vol. 1: Report, Together with Formal Minutes, Oral and Written Evidence

This report by the Environmental Audit Committee welcomes the Government's decision to set the fourth carbon budget - required under the Climate Change Act - at the level recommended by the independent Committee on Climate Change.

But it questions the Government's decision to announce a review of this budget in 2014 in response to fears that it could be bad for business.

The MPs warn that the prospect of a review could weaken investor confidence in low-carbon industries as it creates uncertainty about the future trajectory of emissions reductions. In setting the fourth carbon budget, the Government announced that it would bring forward a package of measures to help energy intensive industries most at risk of so-called 'carbon leakage'.

There should be a robust sector-by-sector assessment of whether jobs and production could be displaced by the UK's carbon budgets.

The 2014 review could ease the budget if the UK's emissions reduction trajectory is steeper than that required by the EU's Emissions Trading System. However, the recommended carbon budgets should be regarded as an absolute minimum - less ambitious budgets would make the UK's 2050 climate change targets harder and more costly to achieve.

The MPs strongly support the mandatory emissions reporting by business in order to aid transparency and illustrate the contributions that companies are making.

The report also criticises Ministers for dropping plans to require Government Departments and Local Authorities to budget for the carbon emissions produced by their policies and operations.