Reliable and trustworthy emissions data is essential to the functioning of a Net Zero economy. National carbon accounting policies can drive the adoption of consistent standards, which in turn encourage disclosure of accurate and interoperable emissions data. The existing regulatory landscape is increasingly setting more stringent requirements relating to carbon accounting. Without effective international coordination, there is a risk of further complicating the landscape with diverging standards.

In this report, we identify international considerations for a Carbon Regulator and implications for UK exports based on a review of national policies. Firstly, this report considers the national policies of a select group of countries chosen based on their trade proximity to the UK. Secondly, the report outlines key considerations for a Carbon Regulator based on a review of international coordination initiatives across industrial sub-sectors. Finally, the report identifies opportunities for a Carbon Regulator to play a leading role in promoting international alignment in carbon accounting to support UK industry.

Key findings and recommendations:

1. Harmonisation of global carbon accounting standards:
   The report underscores the urgent need for harmonised methodologies in global carbon accounting. Diverging international standards increase the administrative burden on UK companies and make it difficult to compare emissions data across borders. A UK Carbon Regulator could work alongside global stakeholders to standardise reporting frameworks, thereby ensuring UK businesses can meet international requirements without additional complexity.
2. Promotion of digital interoperability:
   One of the major barriers identified is the lack of interoperable digital tools for tracking emissions data across supply chains. The report advocates for the development and promotion of digital platforms based on standardised frameworks, which would allow for seamless data exchange between companies, suppliers, and international regulators. These platforms would enhance transparency and trust in emissions reporting.
3. Addressing verification and governance challenges:
   Current international governance structures lack consistency in how emissions data is verified and managed. A UK Carbon Regulator could help streamline and standardise the accreditation of verification bodies, promoting the credibility of UK-reported emissions data on the global stage. This would not only build trust but also ensure UK industries are well-positioned for international trade.
4. Supporting UK exports in a low carbon economy:
   UK businesses face increasing complexity in satisfying various international emissions standards, particularly in key export markets. The report warns of risks, including reduced customer demand and restricted access to finance for companies that cannot meet these diverse requirements. A UK Carbon Regulator should support exporters by aligning UK policies with international low carbon product standards, safeguarding the global competitiveness of UK goods.

International engagement and leadership:

The report highlights the UK’s leadership role in international carbon accounting initiatives. However, further engagement is essential. By establishing a Carbon Regulator, the UK could position itself as a global leader in promoting aligned standards and best practices, ensuring that UK policies reflect global trends while mitigating risks for UK industries.

To achieve this, the Carbon Regulator must be empowered with a clear mandate for ongoing international engagement. This should be supported by other governmental bodies such as the Department for Business and Trade, ensuring a coordinated approach to tackling carbon accounting challenges at home and abroad.

Implications for policymakers:

A regulatory framework that aligns with international standards and addresses the identified challenges will be key to ensuring that UK businesses remain competitive in a global low carbon economy. In particular:

• International coordination is vital to prevent the fragmentation of carbon reporting requirements.
• Digital innovation will play a critical role in simplifying the compliance process for UK industries.
• Verification standards must be consistent to support the credibility of UK emissions reporting.