UK Parliament Environmental Audit Committee consultation on the Seventh Carbon Budget

Consumer Scotland is the statutory body for consumers in Scotland. Established by the Consumer Scotland Act 2020, we are accountable to the Scottish Parliament. The Act defines consumers as individuals and small businesses that purchase, use or receive in Scotland goods or services supplied by a business, profession, not for profit enterprise, or public body.

Our purpose is to improve outcomes for current and future consumers, and our strategic objectives are:

• to enhance understanding and awareness of consumer issues by strengthening the evidence base
• to serve the needs and aspirations of current and future consumers by inspiring and influencing the public, private and third sectors
• to enable the active participation of consumers in a fairer economy by improving access to information and support

Consumer Scotland uses data, research and analysis to inform our work on the key issues facing consumers in Scotland. In conjunction with that evidence base we seek a consumer perspective through the application of the consumer principles of access, choice, safety, information, fairness, representation, sustainability and redress.

Consumer Principles

The Consumer Principles are a set of principles developed by consumer organisations in the UK and overseas.

Consumer Scotland uses the Consumer Principles as a framework through which to analyse the evidence on markets and related issues from a consumer perspective.

The Consumer Principles are:

• Access: Can people get the goods or services they need or want?
• Choice: Is there any?
• Safety: Are the goods or services dangerous to health or welfare?
• Information: Is it available, accurate and useful?
• Fairness: Are some or all consumers unfairly discriminated against?
• Representation: Do consumers have a say in how goods or services are provided?
• Redress: If things go wrong, is there a system for making things right?
• Sustainability: Are consumers enabled to make sustainable choices?

Our response has been framed by our Consumer Principles. Reviewing policy against these principles enables the development of more consumer-focused policy and practice, and ultimately the delivery of better consumer outcomes.

Consumer Scotland is focused on ensuring that all consumers in Scotland can play a meaningful role in the transition to net zero and addressing climate change, and that their concerns and priorities are reflected in the design and implementation of frameworks and policies such as the UK and Scottish carbon budgets. This focus has influenced our response, which draws on the wide range of research and analysis undertaken by Consumer Scotland on consumers, climate change and the net zero transition.

Climate Change Committee assumptions behind the budget

Question 1: How adequate and deliverable are the Climate Change Committee (CCC) headline assumptions underpinning the ‘balanced pathway’ (e.g. sectoral reductions, technology deployment, economic circumstances, public behaviour) in ensuring compliance with the UK’s statutory carbon budgets under the Climate Change Act, including in light of the new Carbon Budget Delivery Plan?

Drawing on our work around consumers, climate change and the energy transition, Consumer Scotland proposes that delivering the headline assumptions set out in CCC’s advice to government will be contingent on action in three broad areas:

• Ensuring consumers are central to policy decision-making: The changes identified by the CCC will impact on consumers’ lives and livelihoods to a greater or less extent, with the potential to positively improve them. Evidence suggests that the majority of the public continue to support action on climate change and net zero.[i][ii]  Consumer Scotland’s research has found that three-quarters of consumers in Scotland are either ‘very’ or ‘fairly’ concerned about climate change and the environment.[iii]  However, our work has also found that less than a third of consumers say they know a lot about what they need to do to help Scotland reach net zero by 2045.[iv]  Other studies indicate that public support for climate action diminishes when the potential costs are made clear.[v]  Consumer Scotland has developed a consumer framework for addressing climate change.[vi]  It identifies cost alongside convenience, clarity and confidence as key to making progress towards a more sustainable future and bringing consumers on that journey. Without this focus, there is a real risk to the delivery of carbon budgets and net zero targets.
• Making electricity cheaper: CCC recommends that UK government must act to make electricity cheaper to achieve the balanced pathway.[vii]  Consumer Scotland is broadly supportive and is keen to see action in this area, ensuring that any trade-offs and unintended consequences for different groups of consumers are sufficiently considered and assessed. To this end we will be producing our own analysis on the Review of Electricity Market Arrangements (REMA). In particular, the decision not to proceed with zonal pricing, its impact on Scottish consumers, and the alternatives that UK government could consider.
• Sustaining high levels of effective policy coordination: Given the mix of devolved and reserved policy responsibilities coordinating activity across different levels of government (including at local level) and fostering effective working relationships will be vital. For example, Consumer Scotland’s home heating investigation report[viii]  highlights clear recommendations for both Scottish Government (e.g., building standards, energy efficiency initiatives and fuel poverty alleviation) and UK Government (e.g., oversight and regulation of energy markets, products standards and safety, consumer protection policy, labour and skills) to enable the transition of over two million homes in Scotland to low or zero-emissions heating over the next two decades.

Electricity

Two major components of the electricity route to the ‘balanced pathway’ are the rollout of heat pumps and electric vehicles. In the case of heat pumps, take up has historically not matched policy ambition. An investigation by the National Audit Office (NAO) in 2024 highlighted that schemes such as the Boiler Upgrade Scheme had not supported the installation of as many heat pumps as planned; of the 50,000 anticipated installations in 2022-23, only 18,900 were installed.[ix] Research published by Consumer Scotland in 2024 found that only 10% of Scottish adults had considered installing a heat pump (air or ground source), with interest particularly low among households with fewer financial resources.[x] Indications are that this picture is improving. To date (as of 16 October 2025) there have been 247,363 MCS certified heat pumps installed across the UK, with 36,866 in Scotland[xi], and the latest CCC progress report highlights market growth of 56% in 2025, in line with the growth needed for the ‘balanced pathway’.[xii] Schemes and policies such as the Boiler Upgrade Scheme, the Clean Heat Market Mechanism and the Warm Homes Plan at UK-level, and the Heat in Buildings Bill Climate Change Plan at Scottish level, will be vital in driving consumer action in this area.

Based on our recent investigation into consumer protections in the insulation and low-carbon home heating sector, Consumer Scotland proposes that meeting Scotland’s low-carbon home heating goals at scale depends on earning consumer confidence and making the journey simpler, safer and fairer. The report highlights the following aspects as critical to this:

• consumers’ access to trusted advice and information in relation to often unfamiliar technologies
• provision of well-targeted support that reduces upfront cost barriers which can be prohibitive
• strengthened consumer confidence through clear standards, protections and robust enforcement.[xiii]

Turning to electric vehicles the CCC reported positive progress ‘with emissions savings from electric vehicles (EVs) doubling every two years over recent years’.[xiv] Yet there is still some way to go. For example, the Scottish Government is unlikely to meet its target of phasing out new petrol and diesel cars and vans by 2030.[xv] Of the around 2.4m private cars in Scotland at the end of March 2024, only 34,254 were fully electric.[xvi] Consumer Scotland research highlights that around half of all households in Scotland live in properties where it is not currently practical to access home charging with its associated  reduced costs and greater convenience. Our research also shows that current EV owners in Scotland have far higher household incomes than the Scottish median household income of £35,048. In response, Consumer Scotland has recommended the following actions to drive uptake:

• improving information and access to electric vehicles in advance of purchase
• upgrading the public charging network. 
• ensuring better access to lower cost charging for consumers unable to charge at home.[xvii][xviii]

Demand

Effective deployment of energy efficiency measures including home insulation will be central to reducing demand and driving the heat pump rollout. The CCC highlights that although there has been an increase in homes with insulated cavity walls over recent years, action will need to gather pace towards the end of the decade.[xix] This will require significant action on the part of, and at potential cost to, consumers. However, evidence of bad practice, scams and rogue trading in the sector with significant detriment to consumers continues to undermine consumers’ confidence, ability and willingness to act. [xx][xxi] Consumer Scotland’s investigation into home heating and insulation recommended:

• providing public support with the upfront costs
• simplifying and consolidating the roles of standards and complaints bodies for consumers
• establishing a system of mandatory accredited quality assurance
• improving complaints and redress systems
• reforming Energy Performance Certificates (EPCs)

Implementing these measures will require actions across Scottish Government including through its new Heat in Buildings Bill and UK Government in its implementation of the Warm Homes Plan.

Technology choices

Question 2: What contingency or resilience measures are needed if anticipated technologies or behavioural changes do not deliver at the pace assumed, in order to remain compliant with the statutory trajectory?

Consumer Scotland has highlighted in our work that high quality, early and sustained engagement with consumers and consumer groups must be undertaken and used to inform transition efforts to ensure effective policy design and implementation and delivery against targets.[xxii] The CCC made similar points in its recent progress report on reducing emissions. The Committee was clear that action was needed from both UK and Scottish Governments ‘to communicate a clear vision to the public’ and ‘provide clear information to households and businesses about how the UK can meet its emissions targets and the role they can play…providing trusted information, signposting to available sources of advice and support.’[xxiii] In addition, and in line with our consumer framework for addressing climate change, alongside information and awareness raising, work needs to be done to ensure that making sustainable choices is more convenient and cost effective for consumers. [xxiv][xxv]

Effective coordination across different levels of government, and with consumers, consumer groups, private sector, charities and others will be essential to keep progress on track and ensure the necessary contingencies and mitigation measures are deployed in a timely fashion. Consumer Scotland has highlighted how impact assessments could be used to do this but underscored the need for assessments to be available for scrutiny early enough in the design process to facilitate high quality engagement from consumers and consumer groups. [xxvi]

Costs, policy choices and economic implications

Question 3: How will the costs of delivering CB7 be distributed between households, businesses and regions, and what policies are needed to ensure fairness, resilience, and public support?

The CCC has recommended that UK government acts to reduce the cost of electricity as a matter of urgency. It has suggested removing levies and policy costs such as the Renewables Obligation, Warm Homes Discount and ECO4 scheme from electricity bills and shifting them to a combination of general taxation, gas bills and Exchequer funding.[xxvii]

It is worth noting that irrespective of how costs are allocated, as HM Treasury pointed out in its Net Zero Review, they will always ultimately come back to households and businesses.[xxviii] Hence any decisions need to consider how these costs, which are essential to delivering net zero and supporting vulnerable consumers, can be moved in ways that enable fairness, resilience and public support. In this regard, the importance of the work that Ofgem has begun around cost allocation and recovery[xxix] is very important. Ofgem’s review is primarily concerned with the way in which different cost categories are allocated to different system users, and how they are recovered from different groups of consumers, rather than removing costs. However, the way costs are assigned can send signals that are either beneficial or detrimental, therefore impacting how cost-efficient the system is.

Consumer Scotland strongly supports Ofgem’s work in this area. The energy system has changed markedly over the course of the last decade and more, and it is appropriate to review the cost recovery framework in a comprehensive way to ensure it remains fit for purpose and that it delivers for consumers. In our response to Ofgem’s call for input regarding cost allocation and recovery, we reiterated how the cost-of-living crisis has stretched the ability of consumers in Scotland to meet their energy needs and levels of indebtedness among domestic gas and electricity consumers are at record levels.[xxx][xxxi] This is a picture that is replicated across the UK.[xxxii] It is against this backdrop that difficult decisions around meeting costs associated with the transition must be made. Consumer Scotland suggests that costs should be allocated and recovered directly or indirectly from consumers in ways that place the burden of risk on those most capable of managing it and avoids asking consumers or others to pay for a system impact they have not created or contributed to. Ofgem and both the UK and Scottish governments must also ensure that bills are affordable, fair and sustainable.[xxxiii]

The cost allocation and recovery work is complex, with the choices involved presenting very real-life consequences and impacts for consumers. For example, changes to some costs on bills could contribute to higher or lower standing charges, benefitting or penalising higher or lower energy users. On this issue, we would note that higher energy use may not always correlate with being well off. For example, people with disabilities and health conditions are groups of consumers who often have higher energy needs with the potential for significant detriment if they ration or cut back. High essential energy expenditure is an often overlooked component of affordability, and income-related support does not tend to account for energy need and the impact of this on expenditure.[xxxiv] The Environmental Audit Committee and other such bodies in UK and devolved parliaments and assemblies have a vital role to play in scrutinising the process and outcomes of the cost allocation and recovery work.

Decisions, and underpinning rationales, about cost allocation and recovery must be clearly communicated to consumers alongside the fostering of a more open and transparent debate around the costs of net zero in which the public is fully engaged.  Cost remains a key consideration for consumers[xxxv], and any discussion of it should also consider the cost, as well as the associated environmental and societal risks, of inaction. Without this, net zero transition and wider climate change efforts, and consumer support for them, could be undermined.

Behavioural change

Question 4: What contribution is behavioural change expected to make alongside technological solutions in meeting statutory targets, and how should government policy support and enable this?

The importance of behavioural change and consumer action cannot be underestimated in meeting net zero ambitions and delivering climate budgets in the UK. Consumer Scotland’s consumer framework for climate change[xxxvi] offers a toolkit for national, devolved and local governments in designing and implementing policy, regulation, and practice that enables positive consumer engagement and action by considering the following perspectives:

• Cost: The costs of responding to the climate emergency are distributed fairly
• Convenience: Sustainable products and services are designed in ways that fit easily into consumers’ lives
• Clarity: Consumers understand what they need to do and why
• Confidence: Consumers trust sustainable products and services, have strong protection, and have access to redress

For each perspective, the toolkit identifies a set of key questions, or tests that policymakers can employ. These are set out in Table 1 below.