Operationalising a Carbon Regulator

In July 2023, Energy Systems Catapult kicked off a two-year project that aims to set out how the concept of a Carbon Regulator could be brought to life. As part of the cross-Catapult Carbon Accounting Programme, funded by Innovate UK and led by the High Value Manufacturing Catapult, we are aiming to answer the question:

What does regulatory oversight for carbon accounting and emissions data look like in a Net Zero economy?

The Challenge

Reliable and trustworthy emissions data will be essential to the functioning of a Net Zero economy.

Some carbon accounting regulations and regulators already exist, for example, the Environment Agency is responsible for the UK Emissions Trading Scheme (UK ETS). But such regulators are disparate and specific to individual policy mechanisms.

There is currently an absence of regulatory oversight for carbon accounting and the monitoring, reporting, and verification (MRV) of emissions to provide this consistently economy-wide.

Proposed Solution

We propose the introduction of an independent Carbon Regulator, economy-wide in scope, for carbon accounting and MRV. A Carbon Regulator would be an independent body, either set up as a new institution, or by extending the mandate of an existing organisation, or it could be a group of bodies working together in a more coherent way.

Regulatory oversight provides clarity, and innovation-friendly regulation can ensure a level playing field for innovators, cut investment risks, and build business and consumer confidence. It can also support:

  • Streamlined Reporting – disclosing once reduces the administrative burden of reporting emissions. Doing so also establishes a single source of truth to be propagated for different carbon accounting use cases (e.g. Life Cycle Assessments and Corporate Reporting). This can only be enabled by the regulation of data best practice and the effective coordination of digitalised reporting and accounting software.
  • Credibility of Emissions Data – regulation can help maintain the integrity of a system, while driving demand for credible emissions. This has advantages such as:
    • Providing investors with confidence that the decarbonisation projects they support have a material effect on emissions reduction.
    • Supporting the third-party verification of emissions disclosures.
    • Standardising reporting methodologies where appropriate.
    • Assuring that all carbon accounting that takes place adheres to an agreed set of principles.
  • Transition to Improved Emissions Data – over time, regulation can improve access for SMEs and other consumers of emissions data to more comparable and complete emissions data. During the transition, regulation can also safeguard organisations from unjust penalisation for gaps in their emissions data, while encouraging a shift towards improved emissions inventories.
  • A Level Playing Field for Competition – independent regulation can mitigate conflicting claims between sectors that provide different products, but serve the same function (e.g., construction materials). In addition to providing customer guidance, this can promote fairer competition and help businesses and sectors identify where best to target innovation to support Net Zero.

Project Aims

With a focus on heavy industry and manufacturing, we intend to answer the following questions:

  • How would a Carbon Regulator work with/support existing, policy specific regulators (e.g., Environment Agency) and support the UK Government’s Net Zero Strategy?
  • What would the MRV remit be (e.g., verification, proxy values, default values, emissions factors)?
  • How would a Carbon Regulator support the development of new standards (e.g., in carbon accounting, data management)?
  • How would a Carbon Regulator be independent?

We will do this by:

In the first year:

  • Identify the principles of good regulation, drawing on insights from existing regulatory practices in the energy, environment, and finance sectors.
  • Understand the existing landscape of carbon accounting regulation.
  • Explore the international considerations for regulation.

In the second year:

  • Identify the practicalities of operationalising a Carbon Regulator, including roles and responsibilities, to propose steps towards implementation.

Related publications - Reports

Carbon Accounting and Standards in Industry: A Framework for Innovation and Growth

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).

Read more

Carbon Accounting in Industry: Learning from the South Wales Industrial Cluster

In this report, we review options for policymakers to support a more consistent and coherent approach to the monitoring, reporting and verification (MRV) and accounting of greenhouse gas (GHG) emissions in industry.

Read more

The Case for an Economy-Wide Carbon Regulator

In this report, The Case for an Economy-Wide Carbon Regulator, we make the case for a new regulator to oversee accurate and coherent monitoring, reporting, and verification (MRV) of greenhouse gas emissions reduction and removal across the economy.

Read more

Related publications - Insight

Carbon Accounting: The Future is Digital – Elle Butterworth

The ability to exchange, compare, track and trace emissions data through supply chains will be fundamental to the UK’s future low carbon economy. Complete and accurate data will support innovations relating to carbon intensive products and processes. Data will also support Government and consumers to make informed, low carbon, decisions.

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Untangling a messy carbon accounting landscape – Elle Butterworth & Dr Danial Sturge

How do we know whether policies are achieving their decarbonisation aims? How can we hold companies to account for delivering their low carbon promises? How can we track and trace emissions through complex supply chains? The answer to all of these is having a well-regulated carbon accounting framework.


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Carbon accounting is more than just numbers on a spreadsheet – Danial Sturge and Elle Butterworth

To achieve the decarbonisation of the whole energy system, it is important to develop a complete and quantifiable picture of GHG emissions that supports decision makers and track progress towards the UK’s Net Zero target. And do so in way that is transparent enough to identify feedbacks and unintended consequences at different levels of the system.

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Carbon Accounting - High Value Manufacturing Catapult

We’re developing a standardised carbon accounting framework suitable for all UK manufacturers.

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Net Zero Carbon Policy

Net Zero Carbon Policy is an Energy Systems Catapult thought leadership project, focusing on how the UK can develop an innovation-friendly, economy-wide framework for Net Zero.

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Markets, Policy and Regulation

Independent thought leadership that combines expertise in clean technology, economics, and energy policy design, informed by cutting-edge modelling and evidence-based analysis.

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