Carbon Accounting in Industry: Learning from the South Wales Industrial Cluster
Net Zero Carbon Policy is an Energy Systems Catapult thought leadership project, focusing on how the UK can develop an innovation-friendly, economy-wide incentive and policy framework for Net Zero.
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.
Drawing on insights from industry stakeholders in South Wales, this report provides a starting point for working with Government to develop an improved carbon accounting framework, that better captures and considers the entire industrial supply chain.
What is Carbon Accounting?
Carbon accounting refers to the processes used to measure and allocate greenhouse gases (GHGs) emitted within a set of parameters for the purposes of maintaining GHG inventories, producing corporate environmental reports, or calculating the carbon footprint of a product or service. It is also crucial for the operation of policy mechanisms to incentivise decarbonisation, such as carbon markets. To date, the application of carbon accounting across these uses has not led to the development of consistent definitions, protocols and/or approaches. The complexity that exists in carbon accounting results from a range of frameworks and methodologies across different operational levels (e.g. corporate and national) and from a mix of compliance and voluntary based mechanisms.
We highlight the integral role of carbon accounting in existing decarbonisation mechanisms, including carbon markets (such as the UK Emissions Trading Scheme) and its potential role for other areas of intervention, such as in product standards.
We also highlight several variations in existing carbon accounting approaches used in industry, making it difficult to derive meaningful comparisons of emissions across industry sub-sectors, clusters, and regions.
Inconsistencies in carbon accounting requirements also increases the administrative burden of reporting on industry and exposes mechanisms to unintended consequences, for example, the double counting of emissions.
We propose to simplify and strengthen the methodologies used by industry in measuring and reporting emissions, supported by a digital exchange platform and regulatory oversight.
Recommendations for Policymakers
Commit to establishing a national carbon accounting framework for industry, with Government providing steer to simplify and strengthen carbon accounting practices across industry. The UK Emissions Trading Scheme could act a starting point for this framework, with complementary mechanisms developed to consider supply chain emissions and opportunities for innovation.
Fund industrial pathfinders that aim to develop an integrated carbon accounting framework for a chosen subset of industry sub-sectors and industrial clusters. This would act an important intermediate step towards developing an industry-wide framework, including understand the digitalisation tools required to support the transition.
To support carbon accounting in industry, explore establishing a Carbon MRV and Accounting Regulator. Such a body would be responsible for ensuring MRV is consistent and comparable across mechanisms. This should build on (and extend) Government’s commitment in the Net Zero Strategy to explore options for regulatory oversight to provide consistent MRV of greenhouse gas removals.
Improve digitalisation to simplify reporting and increase transparency of emissions data for external decision makers. An open-source digital carbon accounting platform could facilitate data aggregation for regional and sub-sector emissions to help track emissions reductions, while protecting sensitive company data.
Read the Report
Carbon Accounting in Industry: Learning from the South Wales Industrial Cluster (SWIC) to develop a consistent and coherent national framework
To download this file, we would be grateful if you could tell us a little about yourself.
We use this information for internal research purposes to help us better understand which energy sector stakeholders are interested in which areas of our work. We do not share your details with any third parties.