Comment by Emily Ford, Senior Energy Policy Advisor at Energy Systems Catapult

Creating a Carbon Reporting and Innovation Office would deliver a step change in the quality, accessibility and comparability of emissions data.

Carbon accounting – the process by which organisations collect, analyse, and disclose emissions data – is rapidly becoming an important part of market infrastructure, both in the UK and internationally.

Done well, it provides investors and innovators with the confidence that their product or service has a place in growing low-carbon markets. It influences strategic decisions at a business level, including which decarbonisation routes to choose, which customers to serve, and which markets to enter. It’s also essential for more effective policymaking.

Why we need to improve carbon accounting

Our new report ‘A Foundation for Economic Growth: Implementing a Carbon Reporting and Innovation Office’ explores the challenges with how carbon accounting is done today, and sets out why this matters when it comes to unleashing UK innovation.

Currently, businesses – ranging from SMEs to heavy industry –  face a time-consuming and resource-intensive process, as they navigate a range of siloed regulations and incompatible standards.

Meanwhile, those using emissions data to guide their decision-making can find that it lacks transparency, consistency and comparability. This acts as a brake on public and private investment into, and the deployment of, low-carbon products and services.

How would a dedicated Carbon Reporting and Innovation Office fix this?

Our proposal for a Carbon Reporting and Innovation Office (CRIO) aims to address these challenges and enable the production of high‑integrity, decision‑ready emissions data across the economy.

CRIO would seek to improve regulatory coordination, reduce administrative burden for businesses and innovators, and enable emissions data to be reused across different regulatory and market contexts.

CRIO would do this by:

• Professionalising the carbon accounting sector: CRIO would support the growth of this strategically important services sector, while improving the quality of its outputs and ensuring value for money for those procuring carbon accounting services.
• Working towards more comparable emissions data: CRIO wouldn’t introduce new carbon accounting standards but rather seek to align existing ones, working with existing regulators and standard-setters. Improved interoperability would reduce the administrative burden for data preparers and increase data comparability for data users.
• Developing a digitally distributed emissions data exchange: CRIO would, in time, develop a single point of disclosure for emissions data, to streamline the data-sharing process for both preparers and users.

These priority regulatory functions are set out in more detail in the timeline below.

How should we setup a Carbon Reporting and Innovation Office?

Our recommendation is that CRIO would be housed within the Financial Reporting Council (FRC). This would allow it to build upon existing expertise within the FRC about the preparation and use of company data, especially relating to sustainability reporting requirements.

It also means that CRIO could be implemented relatively rapidly, potentially becoming operational within 12–18 months, as shown in the timeline below.

We think its resourcing requirements would be modest with 30-50 staff members and a total budget of £2-5 million per year, funded in the long-term by a levy on the carbon accounting sector.

We recommend that any future plans for the FRC include provisions for its structure and remit to incorporate CRIO.

How would CRIO deliver on government’s ambition?

Under the Regulation Action Plan, government has committed to reduce regulatory admin costs for businesses by £5.6 billion by the end of Parliament. CRIO and its work to streamline carbon accounting would form a valuable part of the regulatory reforms needed to deliver on this target.

If implemented, CRIO would enable:

• A thriving carbon accounting sector made up of firms of various sizes and types, employing qualified professionals delivering quality outputs and scaling to meet growing demand.
• Cuts in admin costs for businesses of all sizes when preparing their emissions data, freeing up more financial and human resource for decarbonisation, innovation and growth.
• Better access for UK innovators to green finance and to international markets that require emissions disclosure.
• More trustworthy emissions data that helps investors, government and customers accurately compare low-carbon products and services and channel investment into the most promising innovations.

There is a real opportunity for the UK to lead the way in carbon accounting services, following in the footsteps of its financial accounting sector.

CRIO would enable a step change in the evolution of carbon accounting, supporting UK growth, innovation and international competitiveness over the decades to come.

Read our full recommendations here.