COMPLEX CARBON ACCOUNTING ECOSYSTEM IS HOLDING INDUSTRY BACK COMMENT

The existing carbon accounting ecosystem is complex, limited in coordination, and lacks regulatory oversight to provide consistent emissions disclosures across approaches.

Resolving this challenge is crucial, not only for helping achieve our Net Zero ambitions at the scale and pace required, but to unleash industry’s economic potential.

A COMMON-SENSE APPROACH

At its core, the solution to the challenge facing us is relatively straightforward. We need to adopt a common-sense approach to carbon accounting, with simplified emissions reporting that can adapt to future requirements of emissions data.

There is a balance to be struck between the flexibility required to meet different carbon accounting needs and the standardisation required to mature the existing carbon accounting landscape.

We have explored this balance in our latest report, Carbon accounting and standards in industry: A framework for innovation and growth, produced as part of the Innovate UK-funded, Catapult Network, Carbon Accounting programme. We promote standardisation where it makes sense and flexibility where necessary.

Currently, there are multiple points of emissions disclosures, ways of processing emissions data, and ways of accounting for this data. The methodologies used are often not transparent and not comparable.

Now is the right time to establish an effectively coordinated carbon accounting framework that works for both industry stakeholders and the Government.

Four Steps To A Carbon Accounting Framework

Introducing a carbon accounting framework that garners national and international support will not be easy, there will undoubtedly be hurdles to overcome and stakeholders to convince. The following four steps aim to aid UK policymakers with the transition to a common-sense approach to carbon accounting:

by Elle Butterworth, Energy Policy Adviser at Energy Systems Catapult

1. We propose the creation of a Carbon Regulator with the authority to mandate emission monitoring, reporting, and verification (MRV) practices and to coordinate the use of carbon accounting standards economy-wide. Such a regulator would need to be independent of industry, and the Government, to ensure that the needs and concerns of different stakeholders are all considered.

2. To enable industry to “disclose once”, a carbon accounting framework must be supported by a coordinated digital systems architecture, with standards applied to facilitate the interoperability of emissions data. For this, we recommend a distributed digital approach, where organisations own the emissions data they are responsible for and enable relevant parties to access that data (or a subset of it).

3. The Government should fund a series of feasibility studies for industry sectors to ensure a carbon accounting framework does not stifle innovation opportunities, such as cross sector partnerships to reuse waste materials and promotes a level playing field for competition between, and within sectors.

4. Our international partners should be brought into the discussion at the earliest opportunity. Decarbonisation means going beyond the shores of the UK to mitigate carbon leakage. Standardising emissions reporting at source can enable carbon accounting frameworks to adapt and align to global standards and practices with international partners as they mature.

UNLEASH INDUSTRY’S ECONOMIC POTENTIAL

A carbon accounting framework should provide a more complete, accurate picture of emissions to help inform Government policy. Government will need to consider how policies can best enable innovation and ensure a level playing field for competition.

For UK-based small to medium enterprises (SMEs), a level playing field could be a game-changer. Effective standards can protect SMEs from being disproportionately penalised by additional reporting requirements. Clear standards and data exchange formats enable software service providers to build more generalised products that can be marketed to a wider audience. This enables SMEs to use off-the-shelf products or services to meet their carbon accounting obligations, reducing the need for more complex and expensive, bespoke processes.

WHERE DO WE GO FROM HERE?

Net Zero is a long-term goal requiring an economy-wide carbon accounting framework that is accurate enough to give confidence to investors and consumers, but also adaptable enough to respond to future developments and opportunities for collaboration.

Achieving a carbon accounting framework that works for all stakeholders is a marathon, not a sprint. We cannot wait for the perfect system, we should make incremental steps towards this goal, beginning now. The concept of a distributed digital system should help lay the groundwork for this, building on the digital development already being done in this space.

Ultimately, without effective coordination and regulatory oversight the carbon accounting landscape will continue to develop in a disjointed way.

Read the report: https://es.catapult. org.uk/report/carbon-accounting-andstandards-in-industry-a-frameworkfor-innovation-and-growth/