A carbon accounting framework that provides an accurate and quantifiable picture of emissions across industry is essential for revealing opportunities of low carbon innovation and growth, according to a new report from Energy Systems Catapult.

Carbon accounting and standards in industry: A framework for innovation and growth, produced as part of the Innovate UK-funded cross-Catapult Carbon Accounting programme, proposes a carbon accounting framework to overcome the complexity and limitations of the existing regulatory ecosystem by considering options for robust monitoring, reporting, and verification (MRV).

Elle Butterworth, Energy Policy Advisor at Energy Systems Catapult, said: “The current carbon accounting ecosystem is overly complex and lacks the effective coordination needed to ensure emissions are comparable across accounting practices and traceable through supply chains.

“We’ve also observed an absence of regulatory oversight that has led to the inconsistencies that we see today in carbon reporting. Addressing these challenges is necessary to enable the carbon accounting ecosystem to mature at the scale and pace required for Net Zero”.

The report calls for a common-sense approach to carbon accounting with standardisation where it makes sense and flexibility where it is necessary, including the standardisation of emissions disclosures and the creation of a distributed digital systems architecture.

A standardised framework provides industry with a single point of disclosure, helping to reduce the administrative burden – unlocking efficiency gains – and supports Government with the development of carbon policies.

More broadly, such a framework and standardisation can support economic growth and innovation by simultaneously creating a level playing field for competition and encouraging innovation through collaboration. The British Standards Institution (BSI) estimates that formal standards have increased the UK’s annual GDP by £161 billion since 2000.

The proposals for a carbon accounting framework set out in the report, while centred on the UK market, must be considered in an international context. Government will need to adapt any framework to work with evolving cross-border policies, such as carbon border adjustment mechanisms and product standards. This will be necessary to mitigate against the risk of carbon leakage.

To make a formal framework a reality, the report’s authors Dr. Danial Sturge, Carbon Policy Practice Manager, and Elle Butterworth, Energy Policy Advisor, set out five recommendations for policymakers:

• Introduce a carbon regulator to provide effective coordination and adoption of a carbon accounting framework;
• adopt a “disclose once” principle across a standardised carbon accounting framework;
• engage with the digital spine programme and embark on the development of a distributed, scalable digital infrastructure to underpin emissions data exchange;
• fund feasibility studies to better understand how a standardised carbon accounting framework and distributed data system can be implemented across different industrial sectors;
• work closely with international partners to maintain standardisation of accounting across international boundaries.

Dr. Danial Sturge, Carbon Policy Practice Manager at Energy Systems Catapult, commented: “The UK has long been at the forefront of emissions monitoring and a world leader in tackling our carbon emissions. We’ve hit a stumbling block. The existing carbon accounting landscape is holding back industry and the transition to a Net Zero economy.

“The time is now for the creation of a carbon accounting framework that works for industry and Government, and supports growth and innovation, repositioning the UK as a global leader in emissions reporting. The recommendations set out in the report are designed to unlock economic growth, streamline reporting requirements, and make economy-wide decarbonisation a reality”.