Energy Systems Catapult is calling on government to set up a dedicated carbon reporting office to cut red tape, boost innovation and position the UK to become a global leader in carbon accounting services.
Carbon accounting underpins clean economic growth, giving investors and innovators confidence that a product, manufacturing process, or service can compete in growing low-carbon markets.
In a new proposal published today, Energy Systems Catapult warns that the UK’s fragmented approach to carbon accounting is acting as a brake on innovation, creating unnecessary costs for businesses and producing a morass of inconsistent data that makes it harder for innovators to prove they’re worth investing in and gain access to new markets.
It calls on government to establish a dedicated Carbon Reporting and Innovation Office, embedded within the Financial Reporting Council, to overcome these challenges.
Emily Ford, Senior Energy Policy Advisor at Energy Systems Catapult, said: “Businesses are facing unnecessary costs and a confusing patchwork of reporting requirements. We’re calling on government to establish a dedicated Carbon Reporting and Innovation Office to cut through this complexity, unleash innovation and lay the foundations for a world-leading carbon accounting industry.
“High-quality, comparable emissions data is becoming essential infrastructure for the global economy. Without it, we risk slowing innovation, limiting investment and growth, and putting UK businesses at a competitive disadvantage.”
The report discusses how businesses ranging from SMEs to heavy industry are spending significant amounts of time and resource building inhouse data-gathering systems or relying on expensive consultants to help them navigate the maze of standards, methodologies and frameworks.
The time required to collect, format and submit emissions data is increasingly stretching limited staff capacity and financial resources that could be used more productively to drive innovation and growth.
Furthermore, because today’s carbon accounting system relies on an inefficient mix of voluntary and sector-specific initiatives, outputs can often lack comparability and transparency. This makes it more challenging for customers and investors to compare the emissions between different products and services.
This fragmented approach also makes it more difficult for government to implement policy effectively. For example, the coming Carbon Border Adjustment Mechanism (CBAM) will rely on accurate carbon accounting if it’s to successfully mitigate carbon leakage and safeguard the competitiveness of UK businesses against imported higher-carbon products.
The proposed Carbon Reporting and Innovation Office would sit within the existing Financial Reporting Council where it would:
Energy Systems Catapult estimates that the Carbon Reporting and Innovation Office could be established and operational with 12-18 months, employing 30-50 staff. It would require an annual budget of £2 million to £5 million, which would be funded in the long-term by a levy on the carbon accounting sector.
Dr Danial Sturge, Carbon Policy Practice Manager at Energy Systems Catapult, said: “The government recognises that admin costs to businesses are far too high. Through its Regulation Action Plan, it’s looking to cut red tape worth £5.6 billion this Parliament. Our proposed Carbon Reporting and Innovation Office would help cut these costs and ensure that emissions data is transparent, comparable, and decision-ready. This will allow innovators to better invest in the most promising low-carbon technologies and for government to better target policy intervention.
“SMEs with high growth potential are increasingly being asked to provide emissions data to access markets. A Carbon Reporting and Innovation Office would simplify the process – levelling the playing field for these growing businesses and giving customers greater confidence when comparing low- and high-carbon products or services.”
A copy of the report, A Foundation for Economic Growth: Implementing a Carbon Reporting and Innovation Office, is available to download here.
This report was sponsored by Warwick Manufacturing Group, part of the High Value Manufacturing Catapult, under UK Research and Innovation. It builds upon analysis developed under the Carbon Accounting Programme, which was funded by Innovate UK and was led by High Value Manufacturing Catapult in collaboration with Connected Places Catapult, Digital Catapult, Satellite Applications Catapult, and Energy Systems Catapult.
About Energy Systems Catapult
Energy Systems Catapult is an independent research and technology organisation. The Catapult’s mission is to accelerate clean energy innovation.
Launched in 2015 by Innovate UK, the Catapult has built a team of more than 250 people, with a range of technical, engineering, consumer, commercial, incubation, digital, and policy expertise. The Catapult draws on sector-leading test facilities, modelling tools, and data collected from its back catalogue of more than 500 research projects.
The Catapult uses that ‘whole energy’ system capability to support innovative companies – small and large – to test, trial and scale new products and services. Impact comes when those innovators attract new customers, new investment, and new grants so they can thrive in the future energy system.
Based in Birmingham, Energy Systems Catapult is part of a network of nine world-leading technology and innovation centres, established by Innovate UK. The Catapult Network fosters collaboration between industry, government, research organisations, academia, and many others to transform great ideas into valuable products and services.